Samia insists on just tax

DAR ES SALAAM: PRESIDENT Samia Suluhu Hassan yesterday launched commission on tax reforms, a measure that is aimed at fostering a more inclusive economy and improving the business environment. The newly constituted commission, which has six months to deliver its findings, is expected to assess various aspects of the tax regime and provide recommendations for reform.

“The decision to form this commission comes in response to feedback from a range of stakeholders, including the business community and taxpayers, as well as the government’s own observations regarding the existing tax system’s performance,” President Samia said.

Speaking during the launch of the commission at State House in Dar es Salaam President Samia said the commission will evaluate the entire tax system, including the levels of taxation, tax exemptions and the overall efficiency of tax collection processes.

“I have constituted this commission to help us evaluate the entire tax system and address complaints raised by stakeholders ranging from high tax rates and multiplicity of taxes to cumbersome compliance procedures,” she said.

its 60 per cent is still in dominated by informal sector, saying the sector has not been fully integrated into the tax system which has negatively impacted national income figures. “In the review of Vision 2025, we found that the informal sector’s contribution to national income was not fully captured. This needs to be corrected and to build an integrated economy, sources of income must be strengthened, reliable and predictable,” President Samia said.

President Samia said its 60 per cent is still in dominated by informal sector, saying the sector has not been fully integrated into the tax system which has negatively impacted national income figures.

“In the review of Vision 2025, we found that the informal sector’s contribution to national income was not fully captured. This needs to be corrected and to build an integrated economy, sources of income must be strengthened, reliable and predictable,” President Samia said.

President Samia said the government wants to build a tax system that is fair and that everyone who is required to pay taxes should pay the appropriate taxes, insisting that all taxes should be collected in accordance with the law.

She further said that the government also wants a tax system that stimulates the growth of the industrial economy and that will contribute to the construction of an integrated economy and that enables the government to fulfil its goals of bringing prosperity to the people.

President Samia further said businesses, in particular, have voiced concerns about the numerous taxes and levies they are required to pay. The Head of State also said tax rates are often unfriendly to small and medium sized enterprises, a problem which hampers SMEs to grow.

The Head of State said some business owners have even suggested that the complex tax regime creates opportunities for corruption.

In addition, she said there are also complaints about government institutions that issue permits and licenses without having synchronised systems in place, leading to inefficiencies and delays.

“The lack of integrated electronic systems between government agencies further complicates tax compliance, making it difficult for businesses to operate smoothly,” she said.

She said the government’s motivation for reforming the tax system is the desire to build an inclusive economy that delivers both rapid economic growth and tangible improvement of people’s lives.

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However, she said the current tax system presents several challenges, both for the government and taxpayers. “Tax compliance has been a complex issue, with employees calling for tax relief while business owners complain about the heavy tax burden,” she said.

President Samia acknowledged that tax issues are complicated worldwide, but noted that Tanzania’s situation is particularly strained due to the small number of registered taxpayers.

“Out of a population of more than 60 million people, only about 2 million individuals pay taxes, creating an imbalance in which a small minority shoulders the tax burden for the entire country. This is a key area that the commission will explore, with the aim of broadening the tax base and ensuring that more people contribute to the nation’s revenue,” said President Samia.

In recent years, the Tanzanian government has implemented various measures to improve tax collection, these include upgrading the Tanzania Revenue Authority’s (TRA) capacity and enhancing the business environment to make it easier for businesses to operate and comply with tax regulations.

President Samia said that in September 2024, the country managed to collect 3tril/- in taxes. While this is an encouraging sign of progress, the President said that there is still much work to be done to further enhance tax revenues and align them with the country’s economic growth.

“Our economy is growing, but this is not fully reflected in the revenues we collect. The economic activities and population size do not match the income we generate through taxes,” she said.

The President also cited renowned legal scholar Arthur Vanderbilt, who famously stated: “Taxes are the lifeblood of government and no taxpayer should be permitted to escape the payment of his just share.” She said that the new commission’s role would be to investigate whether the current tax rates are fair and appropriate for both individuals and businesses.

Chief Secretary Ambassador Moses Kusiluka said the commission has been formed as a result of President Samia pledge to improve and eliminate taxpayers’ grievances, increase the taxpayer base and increase the tax to GDP ratio during the 15th meeting of the Tanzania National Business Council (TNBC) in July this year.

“Among other things, President Samia expressed her intention to form a commission to conduct a comprehensive assessment of the country’s tax system,” he said.

He added: “The primary role of this commission is to assess the tax system and other levies and make recommendations on how to improve them to address complaints about the tax system and levies and to improve the business environment to attract capital and investment in the country.”

Chaired by Ambassador Ombeni Sefue, the commission is consist of nine members, including Professor Florence Luoga, Ambassador Maimuna Tarishi, Ambassador Mwanaidi Maajar, Leonard Mususa David Tarimo, Aboubakar Mohamed Aboubakar, Rished Bade and Professor Mussa Assad.

“I have already held a meeting with the commission and we reviewed the terms of reference. They have assured me that they understand the task ahead of them well and are ready to carry it out effectively,” Ambassador Kusiluka said.

Ambassador Kusiluka said some of the things the commission will do during the implementation of its duties include talking to all relevant stakeholders, holding meetings and conferences with various groups of citizens.