AfricaPress-Tanzania: THE government has formed a team of experts to review Tanzania’s tax system and establish why revenue collected is low despite high economic growth.
Finance and Planning minister Dr Mwigulu Nchemba told reporters in Dar es Salaam yesterday that the 10-member team that includes economists and financial experts will look at technical issues that lead to the mismatch between revenue collection and expenditure.
Despite various measures including the purging of ghost workers from the public wage bill, expected positive impact in the economy has not been registered and the payroll remains massive, he said.
Similarly, Tanzania’s informal sector remains the largest and most attractive in East Africa, with Tanzania just behind Burundi in relation to informal sector reliance, despite Tanzania being the second largest economy within the six-member East African Community (EAC), he said.
Completion of the work will strengthen tax administration and ensure there is a sustainable budget which will facilitate smooth budget delivery, the minister asserted.
“Our country has recorded stable economic growth with an average 6.4percent in the past 10 years which has enabled us to attain middle income status but it is not reflected in what is being collected,” he said.
The minister said that revenue collection was supposed to match with the rate of economic growth to fund government expenditure needs which rise each year.
Average revenue collection for sub-Sahara African countries stands at 15.1percent of the Gross Domestic Product (GDP) with developed countries collecting up to 40-percent of monetary GDP, permitting those countries to more adequately cater for their most important needs, he stated.
Tanzania’s revenue collection levels remain below average Sub Saharan collections, where in the past financial year revenue collection reached 13.3-percent of GDP, while tax revenue stood at 11.2percent of GDP, he affirmed, noting that this trend shows the country can expand its tax base to meet sub Saharan averages.
Forming the committee was intended to implement directives issued by President Samia Suluhu Hassan in urging reforms in methods used in collecting government revenue and in expenditure.
Within the study, the committee has been tasked with recommending how the Tanzania Revenue Authority can do away with the use of muscled task forces in collecting government revenue, he added.
