Tax anger: Similarities and contrasts in Tanzania, Kenya

Although people in both countries harbour concerns about taxes and taxation, they usually express their dissatisfaction differently.

In Tanzania, traders chose to close their shops earlier this week in protest against taxes and levies they deem punitive.

On Monday, traders in the usually bustling business hub of Kariakoo in Dar es Salaam began an indefinite strike and asked other businesspeople across the country to close their businesses too until their grievances were addressed.

An unsigned flyer that began circulating on social media platforms last Friday shows that traders want service and government levies scrapped with immediate effect.

They have also demanded that all taxes to be consolidated into a single collection basket and fines be slashed the level of those imposed for traffic offences.

They also want the Tanzania Revenue Authority (TRA) to stop impounding goods and accept financial statements prepared by registered accounting professionals.

Additionally, they have demanded that foreign nationals engaged in trading activities in Tanzania be expelled and that value-added tax (VAT) be collected from manufacturers at airports and ports only instead of business premises.

The collection of withholding tax is another major point of contention.

“Let’s discuss”

Traders in Tanzania are employing the peaceful, albeit disruptive method of striking to push for specific reforms, according to analysts.
 The government has been engaging traders through their representatives in talks since early this week.

On Tuesday, the Minister of State in the Office of the President (Planning and Investment), Prof Kitila Mkumbo, said the government was suspending the inspection of electronic fiscal devices (EFDs) and electronic tax stamps that was being conducted by the Tanzania Revenue Authority (TRA) through its Kariakoo Tax Region in Dar es Salaam.

The decision was agreed during a meeting convened by Finance minister Mwigulu Nchemba and attended by Industry and Trade minister Ashatu Kijaji and other senior government officials.

It was on the basis of the negotiations that Dr Nchemba said while winding up debate on the 2024/25 Budget that government was working on traders’ grievances.

He noted, however, that it needed time to effect any changes since they would result in a massive reduction in revenues.

Dr Nchemba told Parliament that, for instance, reducing VAT from 18 to 12 percent as demanded by traders would result in a revenue shortfall of Sh600 billion, thus affecting the execution of ongoing mega projects.

“We had a good conversation with trader’s representatives. The government respects their concerns  and proposals and we will continue to listen to them. However, we need to find concrete and realistic alternatives before making decisions such as one on VAT,” he said.

Also, should the government decide to scrap service levies as recommended by traders, the performance of local authorities will take a hit since they depend heavily on income from the charges.

On Wednesday, Kariakoo traders chairman Martin Mbwana, revealed that he had a “fruitful” telephone conversation with President Samia Suluhu Hassan.

It will be recalled that the President has repeatedly stated the government’s commitment to improving the business environment.

“As your chairman, I have spoken with the President and she has assured me that our concerns are being addressed. We now need to decide which path we want to take,” Mr Mbwana told traders in Kariakoo.

The situation in Tanzania contrasts sharply with what has been going on in Kenya where there have been widespread protests reflecting a broader dissatisfaction with the government's overall economic policies.
 Violent demonstrations have rocked 35 of the country's 47 counties as protesters vent their anger against the punitive taxes in the Finance Bill, 2024.

Media reports show that youthful protesters, waving placards and chanting anti-government slogans, took to the streets in major towns and cities across the country.

The protests were ignited by discontent among the youth and were further fuelled by older citizens joining the calls for the rejection of the proposed tax increases.

The protesters expressed their displeasure with President William Ruto’s government, accusing it of being insensitive to the plight of Kenyans.

At one point, the protests turned chaotic when protesters stormed the Parliament building and set part of the parliament building alight.

Police fired live bullets, killing 22 and injuring over 300, according to figures produced by the Kenya National Human Rights Commission (KNHRC).

The unrest also led to "more than 300 injured and more than 50 arrests", the commission's chairwoman Roseline Odede said.

The contentious bill, which was approved by the Parliament earlier this week, initially proposed to introduce a 16 percent sales tax on bread and 25 percent duty on cooking oil.

There was also a planned increase in the tax on financial transactions as well as a new annual tax on vehicle ownership amounting to 2.5 percent of the value of the vehicle.

In response to public opposition, the government said it would drop these measures.

In response to public anger, President William Ruto declined to sign the bill and sent it back to Parliament.

Academics weigh in

Commenting on the different approaches, Prof Mohammed Bakari of the University of Dar es Salaam said this stems from the attitudes and nature of the people of the two countries.

“The political culture in Tanzania is one of restraint, with a high level of tolerance compared to Kenya,” he said.

Prof Bakari said while in Kenya the Finance Bill has affected all citizens, including the lowest income earners and even the unemployed, in Tanzania the most vocal group has mainly been businesspeople.

“This is understandable since many businesses are still in the recovery stage from the impact of the Covid-19 pandemic and other global headwinds,” he said and called for proactive solutions from governments in response to citizens’ grievances.

University of Dodoma lecturer Justine Kajerero said Kenyans are more advanced in terms of civic awareness and their approach has demonstrated how they can push their agendas both nationally and internationally.

“Tanzanians and Kenyans have a common message, but in Tanzania obedience is embraced and most people are not confrontational. We normally use soft approaches,” Mr Kajerero said.