Tanzanian MPs push for broader tax base as government eyes Sh34 trillion

Dar es Salaam. Members of Parliament have ramped up calls for comprehensive reforms to expand Tanzania’s tax base, as the government targets Sh34.1 trillion in revenue for the 2025/26 financial year.

Finance and Planning minister, Dr Mwigulu Nchemba, told Parliament that the Tanzania Revenue Authority (TRA) is expected to collect Sh32.31 trillion in tax revenue, with an additional Sh1.79 trillion projected from non-tax sources.

During budget deliberations on Tuesday, June 17, 2025, MPs proposed a raft of measures aimed at improving tax compliance, empowering local businesses, and enhancing overall revenue mobilisation.

Special Seats MP, Ms Neema Lugangira, urged the government to intensify efforts to formalise the informal sector, which contributes significantly to economic activity but remains largely untaxed.

“Many businesses still operate informally. The government must fast-track formalisation,” she said.

Ms Lugangira also proposed incentives for marginalised groups, suggesting a three-year tax holiday for enterprises founded by youth, women, and persons with disabilities.

“Foreign investors often enjoy tax exemptions of up to five years. Why not extend similar support to our citizens?” she asked.

Special Seats MP, Ms Suma Fyandomo, advocated for the integration of tax education across all levels of schooling to nurture a culture of voluntary compliance.

“Tax education should be embedded in the curriculum from primary to higher education,” she said. “The inclusion of business studies is a welcome step, but more is needed to shape responsible future taxpayers,” she added.

Lulindi MP, Mr Issa Mchungahela, highlighted the disparity between Tanzania’s workforce and the number of active taxpayers.

“It is unacceptable that only a small segment of the population pays tax despite the country having a large labour force,” he said.

According to 2024/25 budget documents, Tanzania had 2.47 million registered taxpayers as of December 2024—comprising 2.21 million individuals and 257,993 entities. Makete MP, Mr Festo Sanga, endorsed proposed amendments to the Business Licensing Act aimed at safeguarding local enterprises and regulating foreign participation. Dr Nchemba has proposed repealing Section 3(4) and introducing Section 8(7), which would empower the Trade Minister to restrict specific business areas to Tanzanians only.

Mr Sanga further advocated for the promotion of a cashless economy to enhance transparency and streamline tax collection.

Sikonge MP, Mr Joseph Kakunda, stressed the importance of infrastructure development in attracting and retaining investors.

“Affordable and efficient transport systems are key to positioning Tanzania as a competitive investment destination,” he said.

Budget deliberations are set to continue throughout the week as MPs scrutinise the fiscal framework and propose refinements to support inclusive growth.