Tanzania: Tanzanians need to reform taxation and embrace it

The Tanzanian government has promised to ensure that Dodoma becomes the country's fully-fledged capital by 2020. There is no better time to reform the tax system, says Anaclet Rwegayura.

There is a great transaction of coming and going around Tanzania's new capital, Dodoma, as the once sleepy railroad and highway interchange town becomes full of noise and bustle.

Civil servants and their families from the former administrative capital, Dar es Salaam, are making haste to settle down in their new surroundings. Following in their wake are enterprising street vendors, probably as well from Dar es Salaam, who compete for space on the thoroughfares to display their consumer merchandise. Their goal must be to catch part of the clientele moving to the new capital.

In building a new national capital everyone has to put up with a little hardship. Everyone, inclunding the government, has to act with urgency to meet a deadline.

The government has promised that the move from Dar es Salaam will be completed by 2020.

As the government gets down to business in its new capital, the crush of newcomers inclunding small entrepreneurs, is bound to give the city a new spurt of increase and a boom in business, upon which the government is counting for an increase in revenue.

Behind the hustle and bustle of Dodoma, Tanzanian lawmakers are working on the government's budget for the fiscal year 2017/2018 which should be a matter of concern to each citizen.

The lawmakers determine the allocation of funds to ministries and local authorities and decide what to tax in order to raise revenue.

Decisions governments take about budgets - the fiscal policies they pursue - invariably touch and determine people's lives.

Public servants may benefit if a government raises wages. But the self-employed always hate a government that hikes taxes. They dislike paying money to the national coffers and assume it will either be stolen or spent extravagantly.

They as well do not readily appreciate that taxes are necessary if the government is to function properly. A lot of see the government as a very rich institution and if it were in need of money, they say, again it has a lot of sources at its disposal inclunding natural resources and donors. Very few of Tanzania's self-employed are fans of the Tanzania Revenue Authority (TRA).

Tanzania needs a better and efficient strategy for collecting taxes instead of the coercive methods directed at a small % of the people -- the entrepreneurs and employees. The tax base needs to be broadened and rates of taxation need to be pegged at acceptable levels. The TRA has to be able to collect all of the taxes that are owed to it.

Tanzanians have to be kept better informed about taxation. Part of the problem is that the word 'taxpayer' has become so politicized that even citizens with neither a tax identification number nor a recognized source of gain are claiming to be taxpayers. They may indeed be justified in doing so. They share the burden of sales tax, which they pay from a position of poverty and not from fat pockets.

And if nearly everybody identifies as a taxpayer again it is hardly surprising that at the same time as elections come around, politicians cite development projects such as new highways, airports and large bridges as outcomes of domestic taxes, even though the world knows they were financed by development partners inclunding the World Bank, the African Development Bank, Kuwait Fund and the Arab Bank for Economic Improvment(BADEA) part others. It's a tactic for winning votes.

Next elections, politicians quickly forget that members of the electorate have their own personal dreams and aspirations. In their speeches, the politicians repeat the well-worn mantra that Tanzania will become an industry-based economy by 2025. They have forgotten that what the majority of citizens want is a decent home they can call their own, equipped with electricity, water and other facilities.

Should Tanzanians really have to wait until the hyped-up industries start humming before rural roads are tarred and sewers and paved streets are built in dusty towns?

Tanzania could make a bigger stride in development if its tax collection was additional efficient and if the tax authorities acquired a additional human face at the same time as dealing with small taxpayers, who regard taxation as a way of choking off their economic survival.

They are self-employed who own small businesses and who could raise their productivity if given free advice by professionals. They have been running their businesses in the same manner for a lot of years. They all face similar challenges but have no business networks through with which they could discuss new ideas and practices. Tanzania's local business landscape needs transforming.