Low collections on Value Added Tax (VAT) and the continued
numerous tax exemptions in the country has been cited to be a major cause of a
national debt which has tuned to Sh. 22 trillions, it has been learnt. A member
of the Tanzania Tax Justice Coalition Moses Kulaba said on Friday last week in
Dar es Salaam that, the trend of tax exemptions in the country has been constantly
increasing by 50 percent each year for the last four years since 2009. Kulaba
was presenting a paper titled ‘Value
Added Tax and Tax Administration Bills 2014’ at a breakfast debate
organized by Tanzania policy forum in which he said that the trend of Tax
exemptions has increased from 2.3 percent to currently 4.6 percent compared to 15.7
percent of Tax revenue to GDP. He also noted that, Tanzania lags behind in the
collection of its Value Added Tax (VAT) among the East African region by collecting
up to 40 percent compared to other countries like Uganda and Kenya which
collects 45 percent and 58 percent respectively. He further noted that,
numerous tax exemptions together with other things have been creating a
loophole for tax avoidance and which has ultimately undermined transparency and
accountability.
He noted that, the benefits of tax incentives are widely exaggerated
while the cost are often underestimated or overlooked altogether Tanzania
policy forum had organized a debate focusing discussions on the two tax bills
for VAT and Tax Administration which currently is in parliament waiting for approval
to become a law. The forum conducted a debate with a view to see how Tanzania
is going to benefit from the two bills if passed. The analysis examined whether
these bills will have impact in reducing tax incentives and streamline tax
administration as it was stipulated in the 2014/15 budget speech by the
Minister for Finance Saada Mkuya that had assured high level of transparency in
granting exemptions. Contributing on the debate, the Principal Tax Payers’
Officer of the Tanzania Revenue Authority (TRA), Hamisi Lupenja said that,
numerous tax exemptions has been overloading tax base in the country, thus
making the national debt to increase tremendously. However he said that, the
government need to restructure the whole system of tax collection systems and
suggested that all business entities should be registered to let them pay taxes
as this is a concern of everybody in the country. The government also needs to
concentrate on its defense mechanism against tax evasion and seal the loopholes
of some businessmen who tend to be untrustworthy in their trading activities so
as to save the nation.
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