Reforming through collective inclusion

TANZANIA: TAXATION plays a crucial role in financing economic development and public services in every nation.

Governments rely on tax revenues to fund infrastructure, healthcare, education and social programmes.

However, tax policy reforms often face resistance due to public distrust, lack of awareness and limited involvement in the decision-making process.

In many East African nations, tax policies are sometimes perceived as government-imposed measures rather than collaboratively designed frameworks that reflect the needs of the people.

Historically, limited transparency and inadequate communication between policymakers and citizens have contributed to inefficiencies in tax administration, low compliance rates and widespread tax evasion.

Many businesses and individuals, particularly in the informal sector, feel disconnected from tax reforms, leading to challenges in implementation. To address these issues, fostering community involvement in tax policy development is essential for creating fair, effective, and sustainable tax systems.

By actively engaging citizens, businesses, and civil society organisations, East African governments can build trust, improve tax compliance and design policies that reflect economic realities. This participatory approach ensures that tax reforms are not only technically sound but also widely accepted and democratically validated.

This article explores the importance of public participation in tax policy development, existing engagement strategies, success stories from the region and ways to improve community involvement in shaping East Africa’s tax systems.

Equally, the article examines existing public engagement strategies, their successes and challenges and lessons from case studies that highlight effective citizen participation in tax policy development. The analysis draws from public opinion surveys, reports on past engagement initiatives.

Review

Governments and tax authorities typically use multiple approaches to engage citizens in tax policy discussions, a point emphasised by Suzanne Diu from Emirates Group. She noted that public consultations and hearings provide essential platforms for individuals, businesses and civil society organisations to offer feedback on proposed tax policies.

However, she stressed that these engagements should be continuous and evolving rather than one-time events. Surveys and opinion polls also play a crucial role, helping policymakers gauge public awareness and attitudes toward taxation, thereby identifying areas that require further clarification or adjustment.

James Raphael, a senior executive at a leading bank in Uganda, underscored the vital role of media campaigns—spanning radio, television, newspapers and social media—in disseminating tax-related information and fostering public participation in ongoing reforms.

However, he observed that engagement through these channels has been minimal in the current landscape, which could hinder the commission’s ability to gather a well-rounded perspective from all stakeholders, particularly those at the grassroots level.

Nevertheless, he pointed out that the commission may have anticipated this challenge and sought to address it by leveraging widely circulated publications such as the ‘Daily News East Africa Edition’ and its online platform.

By facilitating broader discussions and incorporating diverse viewpoints, this strategy ensures a more inclusive dialogue on tax policy, extending beyond Tanzania’s borders to engage stakeholders across the region.

Beyond media outreach, research indicates that some countries have adopted more structured approaches to public engagement. Stakeholder engagement committees, comprising representatives from the private sector, labour unions and advocacy organisations, play a crucial role in shaping tax policies by providing organised input.

Additionally, public-private dialogues serve as direct platforms for discussions between tax authorities and business leaders, helping to ensure that tax regulations align with economic realities and industry-specific challenges.

Challenges seen

Despite the commendable progress made by the commission, several pressing challenges must be addressed in its final report to the president to ensure meaningful public participation in tax policy development.

A colleague from the International Monetary Fund–African Department, who wished to remain anonymous, pointed out that one of the most significant issues is the limited public awareness and understanding of tax policies within Tanzanian communities.

This lack of knowledge makes it difficult for many citizens to provide substantive input during discussion forums. As a result, participants often repeat familiar grievances or veer into unrelated topics, rather than contributing constructive feedback on tax reforms.

tutions remains a major concern. Historical experiences with corruption and mismanagement have led to scepticism, discouraging many citizens from engaging in tax policy discussions.

The informal sector, which constitutes a substantial portion of Tanzania’s economy, also faces systemic exclusion from these conversations. Even when informal sector workers are represented, their concerns often take a backseat to political rhetoric or ideological narratives that fail to address the practical realities they face.

Communication barriers further complicate the process. Many engagement efforts are structured around bureaucratic procedures that fail to reach ordinary citizens, particularly those in rural areas. For instance, how many farmers, fishermen, or everyday workers from remote regions have been directly engaged in this process?

The commission’s reliance on complex and cumbersome online mechanisms as a primary tool for public input has likely alienated large segments of the population who lack digital access or familiarity with such platforms.

Moreover, even when public participation does take place, there are often no clear follow-up mechanisms to demonstrate how citizen input influences final tax decisions. This lack of transparency fosters frustration and disengagement, ultimately weakening the legitimacy of the reform process.

Addressing these challenges should be a priority for the commission as it finalises its report to the president. Without deliberate efforts to enhance accessibility, inclusivity, and accountability in the engagement process, the tax reforms risk being seen as disconnected from the realities of the very people they are meant to serve.

Case studies review

To illustrate the challenges of public participation in tax policy development, we examine three relevant case studies from Tanzania and other East African countries. These cases highlight issues such as limited public awareness, lack of trust in government institutions, exclusion of the informal sector, communication barriers and the absence of follow-up mechanisms.

Tanzania’s fallout (2016)

An independent researcher from the Tanzania Institute of Tax Management – Dar es Salaam, Jumanne Msuya highlighted a significant policy shift in 2016 when Tanzania introduced a Value-Added Tax (VAT) on agricultural inputs such as seeds, fertilisers and pesticides.

This action sparked intense criticism from farmers, who argued that the tax would drive up production costs and jeopardise food security. However, Mr Msuya points out that many smallholder farmers were not directly consulted during the policy development process.

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Instead, their concerns were predominantly voiced by political figures rather than industry representatives with practical, technical expertise in agriculture. As a result, the policy failed to capture the true challenges faced by rural farmers, leading to widespread dissatisfaction.

In response to the growing opposition and protests, the government was compelled to reverse the decision in 2017, ultimately exempting agricultural inputs from VAT. This case clearly illustrates the dangers of neglecting direct engagement with affected groups, particularly those in rural communities.

The lack of inclusive consultation led to a policy failure, forcing the government to backtrack. It serves as a powerful reminder of the importance of ensuring that tax policies reflect the realities of the populations they impact.

Uganda’s dilemma (2018)

In July 2018, Uganda introduced a daily tax on social media usage, aiming to increase government revenue and regulate online communication.

According to a researcher at Makerere University, Namazzi Byaruhanga, the policy was met with widespread opposition, particularly from youths, digital entrepreneurs and civil society groups across the country. One of the main criticisms was the lack of meaningful public consultation before the tax’s implementation. The researcher emphasised that many Ugandans, especially those in rural areas, were unaware of the tax until they saw deductions from their mobile money accounts. This lack of communication created confusion and frustration, particularly in marginalised communities who were most affected by the policy. The engagement process largely relied on bureaucratic meetings held in urban centres, which excluded the voices of rural citizens and informal sector workers who rely heavily on social media for communication and business. This failure to incorporate diverse perspectives led to massive protests, with many Ugandans questioning the fairness and transparency of the tax. The outcry from citizens, particularly the youth, contributed to a significant decline in social media usage, undermining the very goal of generating revenue. Ultimately, the tax’s implementation did not achieve its expected revenue targets and highlighted the need for a more inclusive and accessible public consultation process when enacting policies that impact the entire population.

Kenya’s backlash (2020)

John Peter, a researcher from Karatina University – Riverbank Campus, provided invaluable data that sheds light on Kenya’s introduction of the digital services tax in 2020, aimed at capturing revenue from the expanding online economy.

His research reveals that despite the government’s efforts to hold public consultations, many small-scale digital entrepreneurs, particularly those in the informal sector, were unaware of these discussions. Peter further explains that a survey conducted by the Kenya Revenue Authority (KRA) revealed that nearly 60 per cent of respondents had not heard about the tax until after it was implemented.

The consultation process largely relied on formal sector associations and online submissions, which, as Peter points out, excluded many grassroots stakeholders who lacked the means to participate.

This gap in engagement led to significant backlash from digital businesses and entrepreneurs, who felt the policy was developed without their input or consideration of their challenges.

The widespread resistance, especially from the tech sector, forced the Kenyan government to revise certain aspects of the digital services tax, underscoring the critical importance of inclusive public engagement in policy development.

This case highlights how inadequate engagement with key stakeholders, particularly those in the informal sector, can lead to confusion, dissatisfaction and ultimately the need for policy revision. It emphasises the necessity for governments to employ more inclusive and accessible consultation mechanisms to avoid alienating crucial parts of the economy, particularly as digital sectors continue to grow and evolve.

Way forward

A senior member of Tanzania’s leading opposition party recently suggested that, to strengthen public participation in tax policy development, the government should simplify communication by presenting tax policies in clear, non-technical language, supported by visual aids.

This sentiment was further echoed by a professor at the University of Dar es Salaam, who emphasised the importance of expanding digital engagement through social media, mobile applications and online surveys to reach a broader audience, particularly younger populations.

However, he stressed the need for using accessible platforms, avoiding overly complicated systems like the ones employed by the commission during this tenure.

District commissioners across the country have also highlighted the value of engaging local communities through partnerships with grassroots organisations and community leaders. This approach would help enhance tax awareness and ensure that information is accessible to people in various regions.

As one district commissioner noted, such outreach should be a priority when gathering public input, especially on issues that impact the nation at large.

“This nation is not only for the privileged or the educated, but for everyone,” he emphasised, reflecting the core message of Tanzania’s President, Dr Samia Suluhu Hassan.

Another key point raised by an international monetary fund colleague and later supported by a macroeconomist from the World Bank, is the necessity of establishing continuous feedback mechanisms. These systems would allow citizens to see how their input shapes tax policies, fostering a sense of ownership and engagement in the process.

Furthermore, it was widely acknowledged that ensuring diverse representation in tax policy discussions—by including informal sector workers, small businesses and marginalised groups—would contribute to a more inclusive and equitable taxation system.

Many respondents also emphasised the importance of reviewing government expenditure patterns and the challenges associated with them, arguing that a deep understanding of these factors is vital for effective tax reforms. As we near the conclusion of this series, we had originally intended to wrap up; however, due to numerous requests, we will be releasing a follow-up discussion next week that delves into the relationship between government spending and tax reforms, along with recommendations for the commission on this matter.