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Jacques Morisset, World Bank group lead economist for Tanzania said yesterday that despite good progress in the late 2000s, the current level of tax revenues in Tanzania remained one of lowest in the world.
At a high level panel discussion on the Future of Development Finance in Tanzania, Morisset who is the main author of the WB Tanzania Economic Update said that the low level of tax revenue collection reflected systemic issues in policy and administration. It also has serious implications for Tanzania’s economic future, he declared.
The government collected $6 billion worth of revenues or approximately 12 per cent of the GDP in 2014, enough to cover almost three-quarters of government expenditure, but insufficient to fund much needed investments in infrastructures and social services. “Tax revenue is currently too low to finance the country’s ambitious, but vitally necessary, public investment programme. At the same time, other sources of financing are increasingly limited, particularly with the decline in the value of aid inflows and with the limited availability of loans from private sector sources,” he said.
Commenting on the topic ‘Future of Development Finance in Tanzania,’ the chairman of the Tanzania Private Sector Foundation (TPSF) Dr Reginald Mengi said that revenue collection has been poor due to rampant corruption. He said corruption among public officials was among reasons that hinder the government to improve welfare of citizens as well as infrastructures and social services.
“Tax evasion is caused by corruption, while extremely poor citizens who expect to get social services managed by public servants are unable to access them due to such malpractices,” said Mengi.
Makhtar Diop, the World Bank’s vice-president for the Africa region said many African countries don’t do much in dealing with corruption.
He said there is need to strengthen means of curbing corruption as well as to formulate tax procedures that will reflect the nature of the country’s economy to increase productivity.
He said that the government must implement a series of bold and innovative actions, in addition to traditional administrative measures, to make the tax system affordable, fair and transparent.
Outgoing World Bank country director for Tanzania, Philippe Dongier said that there is need to strengthen economic infrastructure institutions in sectors like power, railways, port and water supply, as well as those delivering education and health services.
Despite the strong economic narrative which continues to support mainly construction, communication and tourism, growth has not had a major impact in reducing poverty, with more than 40 per cent of Tanzania’s population living on less than $1.25 per day, he said.
Officiating at the launch of the publication on the World Bank’s 50 years of partnership with Tanzania, President Jakaya Kikwete said the country has been doing well in improving the economy but there are lots of things that should be done in various sectors.
He said that the country has seen a fruitful partnership with the WB over the past 50 years to accelerate economic growth.
The president told the diplomats that phenomenal progress has been registered in various sectors including education, health and others but much more was needed to support other spheres, including the water sector.
‘There are many projects that have been introduced in the country and most of them focus on education and health, while the water sector has been left behind, which means much support is needed to uplift the sector,” he said.
He said having good road infrastructure, hospitals and schools will not be enough if the country won’t focus on improving the water sector which is vital to the health of the people.
He commended projects carried out by WB saying that the country was proud to have travelled this far with the World Bank Group as a partner.
“Not only have we made significant investments together in power generation, transmission and distribution, ports, road infrastructures, hospitals and schools but we also have learned a lot,” he declared.
In April 2013 Kisesa MP Luhaga Mpina came up with a report that indicated that the government was losing about Sh 2.7 trillion annually due to its failure to collect what it deserved from potential taxpayers in various sectors.
The amount of annual loss was more than what the government borrowed from the Chinese import export bank to finance the construction of the 524km gas pipeline from Mtwara to Dar es Salaam, he said, citing the sectors in which the government was losing revenue as telecommunications, fishing, forestry, mining and informal business.
Giving a breakdown, Mpina said studies by a number of institutions within and outside the country had demonstrated that Tanzania was losing around Sh525 billion in revenues through tax evasion in the mining sector alone.
In the telecommunications industry, the government was losing a whopping Sh600 billion through tax evasions as well, and similarly in the fishing industry where an estimated Sh362 was slipping through ‘white-collar’ thieving hands.
The situation was worse with the informal sector where data showed the government was losing up to Sh 1.3 trillion annually, the legislator had intoned.
SOURCE: THE GUARDIAN
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