Parliamentary budget committee chairman calls for swift ETS rollout to cushion Covid-19 impact

Dar es Salaam.

A swift rollout of the Electronic Tax Stamps (ETS) on more products would help Tanzania not to lose much of its revenue even as it cushions the economy against coronavirus.

This is according to the chairman for the parliamentary budget committee, Mr Mashimba Ndaki.

Mr Ndaki, who doubles as the Maswa West Member of Parliament (MP) on the ruling party’s ticket, said the ETS was designed in such a nature that it was difficult for a company to cheat on the right revenue that it must pay to the government.

“ETS is more important at this time of coronavirus outbreak than at any other time. This is because it (ETS) provides no room for tax evasion which some unscrupulous businesspeople could be contemplating during this difficult time,” Mr Ndaki told The Citizen on phone.

He was speaking during a wide-ranging interview that sought to get his views and those of his committee on necessary fiscal steps for the government do to cushion the economy from negative impacts of deadly virus that causes Covid-19.

His views come at a time when available data shows that actual rollout has not been done on some of the products that were to be stamped with ETS since last year.

The government announced plans to adopt the ETS system in June 2018 and Swiss firm, Société Industrielle et Commerciale de Produits Alimentaires (SICPA) won the tender to supply the system.

The first phase of the ETS rollout was conducted on January 15, 2019 whereby stamps were installed on 19 companies that produce alcohol, wine and spirits.

The second phase – which involved soft and carbonated drinks - was implemented on August 1 last year.

However, the taxman is yet to issue a public notice for ETS rollout on bottled water and juice. This suggests that the old paper stamps are still being used in calculating tax for bottled water and juice.

Mr Ndaki said though at first the budget committee thought that the system would raise operating costs and thus deter the government’s plans to raise revenues, it has since come to its (the committee’s) attention that the benefits of the system (the ETS) far outweighed the detriments.

“We thought manufacturers could be playing with the system to evade tax but the system has proved us wrong,” he said.

Data from TRA shows that excise duty on products that had had ETS stamped on them rose by 33.7 percent from Sh58.2 billion that was registered during the period between February and October 2018 to Sh77.8 billion that was garnered during the same period in 2019.

Excise duty on soft drinks jumped by 8.7 per cent to Sh10 billion between September and October last year compared to the similar period in the preceding year. 

Mr Ndaki meanwhile says this was the right time for the government to put in place tax and administrative incentives that would stimulate industrial production.