In memory of Magufuli: ‘Unpacking’ his tax crusade

Economics

Actions against tax evasion by the late President Magufuli were arguably among the major happenings in Tanzania in his first month in office way back in November 2015. Among other things, a number of issues related to tax evasion were unfolded by the President through the Prime Minister Kassim Majaliwa. This happened at the Tanzania Ports Authority (TPA) and Tanzania Revenue Authority (TRA). Among other things, it was reported that over 350 containers escaped the tax nets of the taxman. Potentially huge tax revenues did not therefore land to the government coffers. Among the measures that were taken include but are not limited to axing those involved from their positions. This is among the areas where the late President Magufuli (pictured) started showing the direction of his administration. It is worth remembering as part of celebrating his life.

Public goods and services
Given what it takes to deliver the many and highly ambitious public goods and services, efforts to collect more tax cannot be escaped. With Development Partners (DPs) kissing aid goodbye and going more the business route and decreased funds over the Covid-19 pandemic, the need for increasing domestic tax revenues to finance public expenditure cannot be overemphasized. Tanzania has a rather very narrow tax base including huge informality with negative implications to tax revenues, arguably huge tax incentives, complaints on not so good tax regime from captains and titans of the industry and much more. To be able to finance the highly needed, ambitious and expensive public goods and services, the tax crusade was a must - and resonated well with the key theoretical and conceptual foundations of increasing tax revenues.

Ways forward
The direct intervention by the late President Magufuli on the tax matter was a huge signal on the need to improve domestic resources mobilization. These were efforts to bring to the tax net taxes from various sources including from international trade. One expects similar efforts by those currently in power. However, it will be very important to learn from lessons of experience on what works and what does not work in tax crusades.
Among other things, good and important as they are, tax crusades should take participatory approaches and adhere to all good characteristics of good tax system.
Among others, tax crusades should not lead to constraining businesses and investments. Tax crusades should ensure that taxation is becoming not just a revenue tool but also a development tool. There should be investments in tax revenue sources so as to make them more productive and yield higher taxes.