Why writing was on the wall for TRA boss, Trade minister

It was also not entirely surprising that Industry and Trade minister Ashatu Kijaji was appointed Minister of State in the Vice President’s Office (Union and Environment), swapping dockets with Dr Selemani Jafo.

It will be recalled that traders in various parts of the country, particularly in Kariakoo, Dar es Salaam, shut their shops and levelled a number of allegations against TRA as Parliament was debating the government’s Sh49.35 trillion Budget for 2024/25, which was eventually passed on June 26.

Traders’ demands

The traders, among other demands, wanted service and government levies scrapped and that all taxes be under a single collection basket.

The traders were also unhappy with fines imposed for various transgressions and demanded that they be slashed to the level of penalties for traffic offences.

They also said the issuance of receipts should not be considered another tax and dismissed them as a new form of “harassment”.

Additionally, they demanded that TRA stop impounding their goods and accept financial statements prepared by registered accounting professionals.

Although the call for the strike was issued through anonymous leaflets circulating on social media, the walkout, which began in Kariakoo, spread to at least eight regions.

However, just when it was thought that the storm was over, ambassadors from ten countries – the UK, US, Netherlands, Ireland, France, Belgium, Canada, Korea, Sweden and Germany – wrote to Foreign Affairs and East African Cooperation minister January Makamba and they too pointed an accusing finger at TRA.

In their letter dated June 26, 2024, the envoys said despite an increase in the value of registered businesses from $3 billion in 2022 to $5.5 billion in 2023, investors were having problems with TRA.

Envoys from the UK, US, Netherlands, Ireland, France, Belgium, Canada, Korea, Sweden and Germany said investors from their countries were also being subjected to multiple audits by the taxman.

According to the envoys, foreign companies have been receiving unsupported notices from TRA demanding payments and account reconciliations backdated to up to 15 years ago.

“Many companies have faced ‘back agency notices’ that freeze accounts, halt operations and negatively impact employee salaries and suppliers’ cash flow,” the letter says in part.

The envoys also said there are companies that signed tax concession agreements with the Tanzania Investment Centre (TIC) and relevant ministries only to be informed that TRA will neither recognise nor honour the agreements because they have not been gazetted in Dodoma.

They also accused TRA of slapping on foreign firms astronomical tax bills that are not supported by Tanzanian laws and threatening investors and the country’s partners when companies protest or file appeals. Bank accounts and company assets have also been seized without prior notice or legal recourse, according to the diplomats.

“For instance, one company received a notice for Sh1.2 billion, demanding resolution within three working days for discrepancies dating back 12 years, under the threat of having their operational accounts frozen and the funds withdrawn,” the envoys’ letter says.

Similar issues were highlighted during one of the meetings called to discuss the 2024/25 Budget, with tax experts saying that in April and May 2024 businesses were subjected to numerous tax assessments and “back agency notices”.

A speaker at the event recalled that during the Annual General Meeting of the European Union Business Group held in Dar es Salaam last month, a representative of bank said the lender had been issued with 700 “back agency notices”.

A number of tax experts noted that TRA’s iTax had not been updated for a long time.

With no proper updates, some clients received demand notices dating back to 2002 and 2003, the time limit notwithstanding.

It is against this backdrop that analysts said the writing was on the wall for Mr Kidata and Dr Kijaji.

“I’m not surprised at all. Recent circumstances necessitated the changes,” said a political scientist from the University of Dodoma (Udom), Dr Paul Loisulie.

While TRA has been acting within the confines of the law, which means that  Mr Kidata has done nothing wrong, the Industry and Trade ministry  has not fully exercised its mandate, he added.

“It’s the duty of the responsible minister to meet traders, listen to their grievances and lobby and engage them on behalf of the government. It is through engagement that you arrive at a consensus that makes it possible for government business to proceed even as there are some complaints somewhere. This may not have been done properly and that was why traders closed their shops,”  Dr Loisulie said, adding that the docket needs someone who can engage traders and convince them to accept the government’s line of reasoning.

Dilemma

However, there is a dilemma, Dr Loisulie added.

TRA’s duty is simply to implement the law that was originally drafted by the Finance ministry and approved by Parliament.

While the government needs money to implement its pledges to the people, the funds must be collected in a manner that does not interfere with the interests of the people, who also happen to be voters.

 “So, in short, politicians need money, but in the process of collecting that money, you should not trample on voters’ interests. That’s the dilemma whoever happens to occupy the office of TRA Commissioner General faces,” Dr Loisulie said.

Prof Abel Kinyondo of the University of Dar es Salaam concurred.

He told The Citizen that while TRA was simply applying the law, the Industry and Trade ministry’s setup does not give the minister much room for manoeuvre.

“Going by the existing laws, TRA works like a regulator. The laws are drafted by the Finance ministry and approved by the people’s representatives in Parliament. That is where people’s anger should be directed at,” Prof Kinyondo said.

“Whoever serves as TRA Commissioner General will inevitably take the flak while executing their mandate”.

Prof Kinyondo called for fewer ministries whose responsibilities are clearly defined.

“For instance, since we now have Investment as a separate ministry, under the President’s Office, it is an open secret that whoever holds the docket will stand out. In short, you cannot talk about industry and trade if there are no investments. Putting the Investment docket under the President’s Office and leaving Industry and Trade as a separate ministry has only served to seriously weaken the latter,” he said.