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How Tanzania can curb tax fraud
What you need to know:
- Tanzania can curb tax evasion by implementing equitable tax policies, expanding the tax base and enhancing public awareness and education, according to experts
Dar es Salaam. Tanzania can curb tax evasion by implementing equitable tax policies, expanding the tax base and enhancing public awareness and education, according to experts.
They spoke after President Samia Suluhu Hassan said on Wednesday that some businesspeople have turned the government’s voluntary tax compliance policy into an opportunity to evade or under-report taxes.
“We rejected unjust tax collection, but things have now changed. Some traders are defrauding the government by evading tax and thus depriving it of revenue that would have been used to serve the people,” she said at the Idd Baraza in Dar es Salaam.
The Head of State added that some public officials work in cahoots with unscrupulous businesspeople to deny the government of much-needed revenue.
Speaking to The Citizen, economists said closing existing tax loopholes requires a collective effort involving all stakeholders.
Prof Haruni Mapesa of Mzumbe University spoke of the importance of upholding tax laws and regulations to promote voluntary compliance.
He noted that while Tanzania already has laws guiding tax collection, there is a need for increased vigilance and enforcement to ensure that all individuals and entities fulfil their tax obligations in a timely manner.
“While past enforcement methods sometimes raised concerns about coercion and intimidation, President Samia Suluhu Hassan’s call for voluntary tax compliance was a positive step,” Prof Mapesa said.
According to President Hassan non-coercive tax collection has increased compliance and collections from Sh18 trillion in 2021/22 to Sh24 trillion in 2022/23.
Prof Mapesa said increased tax compliance may also have resulted from business growth, leading to higher tax contributions.
“However, efforts should be made to ensure that all taxpayers fulfil their obligations to maximise revenue, as there is a potential to collect more than what we have achieved,” he said.
Dr Thobias Swai of the University of Dares Salaam (UDSM) said there is a need for fair tax estimation and enhanced public awareness and education on taxation matters.
“Educating taxpayers about their obligations and the consequences of non-compliance is essential for fostering a culture of voluntary compliance,” he said.
Dr Swai also emphasised the importance of simplifying tax procedures, banking on technology and fostering transparency in tax administration.
The World Bank said in its Africa Pulse report for 2024 that countries in sub-Saharan Africa, including Tanzania, can improve domestic resource mobilisation by taxing high-net-worth individuals through income and property taxes, with a particular emphasis on land and property taxation to support local governments.
“Digital technologies can help to broaden the coverage of property taxes. This would require digital record keeping that maximizes interoperability, facilitates updating of records, and allows regulatory oversight; transparency through public access to registry data; and integrated workflows to support record updating and tax enforcement,” the report says.
Eliminating value-added tax exemptions and reforming utilities (through addressing energy subsidies and reviewing water tariffs), which largely benefit high-income households, could also yield more revenue.
