Magufuli eyes to raise tax on the rich

THE ruling Chama Cha Mapinduzi (CCM) Union presidential candidate, Dr John Magufuli, has said he plans to tax more the richest and curb on tax holidays to increase domestic revenues if he wins in the October 25 general election.

Addressing a mammoth rally at Jamhuri Stadium in Morogoro on Sunday, Dr Magufuli said he wanted to boost domestic revenue from current figure of around 900bn/- per month. “I will tax more the rich and plug off the loopholes.

I will also curb tax holidays to investors,” he said at his public rally attended by ruling party bigwigs including President Jakaya Kikwete. He said he would close the loopholes and raising the amount of taxes for which the rich are responsible.

The government plans to boost domestic revenue collection to reach 14.8 per cent of the total economy. According to the latest Bank of Tanzania (BoT) monthly economic review, during May, domestic revenue amounted to 813.4bn/- which was 89.5 per cent of target.World Bank said a report that Tanzania must boost its revenue collection to bolster its strained finances and fund infrastructure projects following a decline in aid inflows. A revenue shortfall amid a slowdown in financial assistance to one of Africa’s biggest per capita aid recipients has left the country strapped for cash.

“The primary threat to Tanzania’s economy comes ... from domestic issues. In particular, low levels of revenue, lower than anticipated aid inflows and the accumulation of arrears with contractors and pension funds have disturbing implications for Tanzania’s fiscal stability,” the World Bank said in its latest economic update report.

East Africa’s second-biggest economy collects around $6 billion in tax revenues per year, equivalent to around 12 per cent of its gross domestic product (GDP). “This covers approximately three quarters of the government’s expenses.

This is insufficient, particularly when other sources of funding, such as foreign inflows, are declining, or limited and borrowing or private sector finance,” said the bank. The World Bank said Tanzania could boost government revenue collection by reforming its tax system to make it affordable, fair and transparent.

“The government has accumulated massive arrears over the past few years ... The plan is to pay those arrears through the issuance of domestic bonds,” it said.

/Daily News.