TPSF suggests ways to widen tax base

Dar es Salaam. The Tanzania Private Sector Foundation (TPSF) has come up with a number of suggestions to help the government widen the tax base.

Proposals include formalisation of the informal sector.

TPSF, an umbrella organisation of the business community in the country, plans to submit its suggestions to the government before the 2018/19 Budget is approved by MPs.

Speaking during a budget analysis forum organised by Deloitte Tanzania on Tuesday, TPSF policy director Gilead Teri said the informal sector had huge potential for tax collection, but had been left out of the tax base due to its informal nature.

“Almost 60 per cent of the economy revolves around informal activities, and yet the people involved don’t pay taxes, license and business certificate fees as well as business registration fees,” he said.

Mr Nasser Adam, Deloitte Tanzania economic analyst and partner, voiced similar sentiments, saying formalising the informal sector and widening the tax base would reduce the burden on current taxpayers.

“When the number of taxpayers increases, the burden of paying taxes borne by a few decreases,” he said.

“It’s important to note, however, that in some instances, the recent enforcement of tax compliance has been overzealous. We encourage increased voluntary compliance through better taxpayer appreciation of the rationale for taxation, clarity and simplification of payment methods so as not to impact negatively on the business climate and confidence,” Mr Adam added.

Meanwhile, experts cautioned the government against what they said were excessive austerity measures it had been taking in the past two years, saying this could eventually hurt the economy.

Speaking at a budget analysis forum organised by KPMG on Tuesday, they said it was not healthy when the government was not spending through the private sector, which is a major economic stakeholder.

Prof Honest Ngowi of Mzumbe University said it was not a bad thing for the government to exercise frugality, but excessive austerity measures could have an adverse impact on the economy.