Forests losing billions in taxes

Saturday July 16 2016

Not only is Tanzania losing its forest cover 

Not only is Tanzania losing its forest cover  but revenues from forest products are not being well managed. PHOTO | FILE 

By Christopher Lilai ; @TheCitizenTz;

Lindi. By 2013 Tanzania was losing almost Sh93 billion annually in forest revenues according to a Traffic report.

Traffic- the wildlife trade and monitoring network is a joint project of the Worldwide Fund for Nature (WWF) and the International Union for Conservation of Nature (IUCN)which deals with   endangered species.

Approximately  40 per cent  of the land in the country is covered with forests and woodlands. This constitutes about 33.5 million hectares of forests and woodlands, including both open (unreserved) and reserved forests.

The open forests are at great risk of depletion despite there being laws and guidelines governing management of revenues from forest products. The collections have been minimal due to a number of shortfalls.

Businessmen dealing with forest products lament over the numerous and multiple taxation processes  and have resorted to deliberately evading paying up their dues.

The Ministry of Natural Resources and Tourism is the overall manager of the forests in Tanzania.

The Forest and Bee Keeping Division under the ministry oversees the daily management of the forest sector. The management of forests is also under local government authorities, through the Prime Minister’s Office, the Regional Administration and Local Authorities.

Mr Bakiri Kilete, a resident of Zinga Kibaoni village in Kilwa District  notes that according to a 2014 directive on the harvesting of forestry products, each business person  is required to obtain a transit pass whenever ferrying forestry products from one district or region to another.

“One, is taxed twice for consignments destined within the region,” he said, citing this as an unhealthy form of taxation.

He listed other anomalies including the discrepancies in  licencing fees.

Giving an example, he said, the cost of the licence for harvesting forest products in a village in Rufiji District is charged differently from one got from another village in Muheza District.

He went on to say that a business licence in Rufiji costs Sh100,000 while in Mkinga Village, Muheza would cost twice as much.

On income tax paid to the Tanzania Revenue Authority, he pointed out that in Rufiji charges Sh762,000 while in Muheza one pays half the amount.

A dealer in charcoal, Ms Mwanaisha Saidi, in Kilwa District noted that there are too many fees and taxes that have to be settled and as such, the profit margins are rather slim.

“Other dealers have resorted to transporting  charcoal on buses to dodge the taxation, as a result they sell their charcoal at lower prices than those of us who use lorries,” she laments.

She would like the government to reprimand dealers who transport charcoal without possessing valid licenses and those who do not pay their dues.

 “Many of those who take advantage are employees of the bus companies and they are hurting our businesses,” she complained.

Another charcoal dealer, Mr Daniel Nanige, says it was unfortunate that revenue that is supposed to go into a special fund to address deforestation is not being used for that purpose as a result, deforestation is threatening the charcoal making business.

“None of the funds seem to directed to replenish the forests and we are wondering where the money goes,” he said.

With reference to the Controller and Audit  General’s Report 2012/13 only four per cent of the country’s forest cover was under any meaningful management plan. 

The report also stated that only five regions, namely; Coast, Dar es Salaam, Mwanza, Tabora and Lindi  had concrete systems for collecting forest revenues.

According to research conducted by the Lawyers’ Environmental Action Team (Leat) under the Mama Misitu project, the multiple taxation system is not only detrimental to dealers of forestry products, but to the government as well.

The research established that the government misses out on billions of shillings as dealers bypass the cumbersome taxation.

The findings show that there were too many players in the process creating confusion and an overlapping of responsibilities.

As a result, revenues from forestry products end up in the pockets of individuals as there are no proper systems to track payments.

Another challenge facing the sub-sector is unpredictable and numerous changes on taxes and royalties.

Between 1972 and 2004 there were 15 changes on rates yet in 2007 there were additional changes.  Most of them were made without consulting the various stakeholders, especially the business community.

Despite the many amendments, revenue collection has remained low and uncoordinated.

The report suggests that the various fees need to be broken down and charged according to laid out guidelines that are uniform in across the districts and regions. 

Meanwhile the Food and Agriculture Organisation (FAO) and the National Forestry Resources Monitoring and Assessment  programme (Nafroma) are concerned that the lack of close supervision has created a situation whereby more trees are being cut down than are planted.

The two entities have  made several recommendations on how to improve the sub sector including the need for the government to reduce rates of fees.

The government has been advised to simplify the application of various licenses and permits.

Application of harvesting of forestry products, especially at village level should be simple for the villagers and there should be strict conditions to ensure that the harvested forests are replenished.

FAO and Naforma together suggest an  improved system to create one-stop centres where dealers can easily apply for permits and pay required fees and taxes.

The  government was advised that when it finds it necessary to hand over management of the sub sector to another body it should be done systematically and legally, with clear directives.

It was highly recommended that fees should be standardised in order to restore trust of the tax payers and that the set rates should be recognised legally in order to avoid a system where each institution sets its own rates.

On top of  setting standard rates, there is a need to conduct massive public awareness campaigns to ensure that all stakeholders are aware of their responsibilities, obligations and rights.

In general exports of primary and value-added forest products generate significant foreign exchange  in other countries.  While tourism based on wildlife resources or scenic forest areas is equally important.