Zitto: Broaden tax base to ease burden on workers

Dar es Salaam. The ACT Wazalendo leader Zitto Kabwe yesterday called on the government to broaden the tax base to ease the burden on workers. He said in a press statement that a lower tax base means salaried workers are heavily taxed.

Mr Kabwe noted that expanding the tax base does not mean increasing taxes, but increasing the number of people paying taxes so that the amount paid per person is reduced and the burden shared among many people.

According to the 2016/17 budget, employees from public and private sector would have to contribute Sh3 trillion in government revenue.

Surprisingly, their employers would contribute only Sh900 billion in dividends, taxes on income, profit and capital gains, Mr Kabwe noted.

In 2015/16, employees contributed Sh2.2 trillion in government’s revenue, with their employers’ accounting for Sh773 billion only.

“With consideration of income tax, employees contribute three quarter of government revenue, with their employers contributing only a quarter,” noted Mr Zitto.

He said the trend was attributed to tax evasion by large companies, calling for proper registration systems so that every business and organization is properly registered.

Taxman must make sure that employees from organizations had proper records as taxpayers, to increase the citizenry contribution to taxes, the move which has in turn the potential of reducing the tax rates. This, according to Mr Kabwe, would be possible if the government reviewed various multinational corporations (MNCs) tax laws, to avoid base erosion and profit shifting.

Over the past 40 years, capital outflow stood at $11.4 billion (an average of Sh24 trillion), according to a book titled: Africa’s Odious Debts: How Foreign Loans & Capital Flight Bled a Continet, written by Leonce Ndikumana and James Boyce.

The interpretation is that, with effect from 1970 to 2010 the country was in each year losing $285 to the rest of the world, with MNCs taking a lead in a move. There is a need then, for the government reviewing double taxation treaties which Tanzania signed with other countries. He said going by official data, the government was losing 5 per cent of Gross Domestic Product (GDP) attributed to tax evasion by large companies through tax planning measures.