Tax holiday causes huge loses to Tanzania government

TANZANIA has lost 7.2trn/- (about 2.13billion US dollars) last year as a result of an extraordinary tax holiday, according to new report by three faith-based organizations. Dar es Salaam based interfaith standing committee for economic justice and the integrity of creation in Tanzania, published their latest report on Saturday, blaming corruption, crime and tax evasion. Named “The One Billion Dollar Question; How Much is Tanzania now Losing in Potential Tax Revenues?”, the report released here indicates that the lost money, that can be linked to tax evasion and incentives, had jumped from 1.3 billion US dollars in 2012 to 1.83 billion US dollars in 2017. More than 1.3billion US dollars revenue was lost to corruption and grafts. Prof Honest Ngowi, an economist said: “Such lost money would have tripled the health budget or doubled education sector spending. It could also have helped transform social protection measures and support the most vulnerable by ten times the current budget.” “The situation is now worse than where we come from,” he said, advising the government to broaden the tax base and deepen campaigns to counter tax evasion. Tanzania is Africa’s fourth largest gold producer and the second East African country with the largest natural gas deposits after Mozambique. Mining companies, according to the study, had not paid tax to the government to the tune of 57 million US dollars or 25 per cent of the tax evasion. President Magufuli launched a crackdown on graft and tax evasion when he took office in November 2015 and has sacked dozens of senior public officials. The report calls for more action on improving tax collection and containing tax evasion loopholes. During the year under review, about 300m US dollars was lost to tax incentives, illicit capital flows (464m US dollars), informal sector (761m US dollars) mining sector (57m US dollars) and other tax evasion taking 250m US dollars. But politicians were worried the 761m US dollars anticipated untapped tax from the informal sector still needed thorough research for the government to fully exploit the sector. Mr Joseph Selasini (Rombo-Chadema) said should the government impose tax on motorcycle taxi operators, for instance, many would be compelled to abandon the business.  The report was prepared by three faith based organizations; Tanzania Episcopal Conference (TEC), National Muslim Council of Tanzania (BAKWATA) and the Christian Council of Tanzania (CCT). It was a follow-up to a similar report they published in 2012. Mr Ezekiel Maige, Msalala MP (CCM) called for the broadening of the tax base and ensure that all Tanzanians pay tax. Interfaith standing committee for economic justice and the integrity of creation in Tanzania Chairman, Bishop Steven Munga, said at the launching of a new report, the committee independently conducted the study to estimate how the country was losing a lot of revenue due to tax evasion, tax incentives and capital flight. The report has urged the government to curb t e leakage of revenue and take steps to ensure money was invested in public service enhancement services.