TANZANIA: ON Tuesday, the Tanzania Revenue Authority (TRA) management announced to have set a new record in tax collection for the first quarter (July-September) of the 2024/25 Financial Year (FY), surpassing all previous figures.
Data show during the period under review, the taxman collected revenue amounting to 7.79tri/-, an increase of 18.4 per cent, when compared to the 6.57 tri/- collected in the corresponding period in the previous fiscal year.
The amount collected is the highest ever achieved by the authority for the July-September period since independence, a good indicator that TRA will meet the revenue target by the end of this new FY.
According to the authority, the new milestones reflect the taxman’s commitment to improving revenue collection system and the positive economic trends in the country.
TRA attributed the achievement to the effective use of Electronic Fiscal Devices (EFD) and the implementation of Excise Tax Stamps (ETS).
Taxation is, for a majority of countries including Tanzania, a major source of government revenue which provides governments with the funds required to invest in development, address poverty and offer public services.
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But, a poorly executed tax system leads to low efficiency, high collection charges, waste of time for taxpayers and the staff and the low amounts of received taxes and the deviation of optimum allocation of resources.
Tax evasion and tax avoidance both contribute in large extent to the problem of low tax collection in developing countries and this is true in Tanzania.
The problem of tax evasion and tax avoidance are inherent in all tax systems.
It has also been found that tax evasion, tax avoidance, lack of specialised skills in tax audit and lack of integrity among tax administrators are among revenue mobilisation challenges facing our country.
Some studies carried out previously established that the main challenge facing tax collection, especially in the micro and small enterprises in Tanzania was failure to identify who should pay taxes and in what amount since businesses operating in the micro and small enterprises were not registered.
Other studies found that the main challenges of domestic revenue mobilisation in the country included; lenient tax incentives, a narrow tax base, the absence of systems and mechanisms to reach taxpayers and limited knowledge on potential taxpayers in the SMEs.
To facilitate taxation of the micro and small enterprises, tax experts proposed for improvement of tax administration including simplification of payment procedures.
To address the challenges of domestic revenue mobilisation in the country, experts recommended that the government, specifically TRA, should effectively exploit ICT to enhance tax collection efficiency, minimise corruption in tax collection and conduct comprehensive and in depth sector studies on how to collect taxes from the informal sector.
We fully understand that TRA is performing a good job but we still believe that more can still be done.