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Digital solutions way forward to boost revenues

MANY countries worldwide are embarking on digital solutions for collections of taxes, levies and other duties and this has proved to be effective and enabled governments to tap requisite taxes and check evasion.

Just like other countries globally, the government of Tanzania is as well undertaking various electronic measures aimed at boosting revenues to finance development projects and recurrent expenditures.

Presenting budget estimates for fiscal year 2020/2021 on June 11, this year, the Minister for Finance and Planning, Dr Philip Mpango, pointed out electronic solutions being implemented by the government of Tanzania to increase tax collection and also ensure proper management of public funds.

These measures include Electronic Fiscal Devise Management System (EFDMS), Government e-Payment System Gateway System (GePGs) and Tanzania Customs Integrated System (TANCIS), among others.

On the other hand, the Tanzania Revenue Authority (TRA) rolled out the first phase of Electronic Tax Stamps (ETS) for products which are subjected to excise duty on January 15, last year. The first phase covered goods such as cigarettes, wines, spirits and beers.

The second phase was rolled out in August, last year, and it extended the system to other products such as bottled water and carbonated soft drinks though the latter is yet to be fully implemented. The tax collector contracted a Swiss company, Société Industrielle et Commerciale de Produits Alimentaires (SICPA) which provides both software and hardware for the technology.

It is through the significant achievements registered through ETS that the Parliamentary Standing Committee on Budget proposed extension of the digital solutions for other products.

Presenting views of the committee on the budget estimates, its Chairman, Mr Mashimba Ndaki (former Maswa West MP through CCM), recommended that the electronic system should be extended to cover edible oil, sugar and farm inputs.

The committee proposed further that ETS should as well be introduced for human and veterinary medicines and cosmetics to check cheating of taxes and counterfeit products. These measures will enable the government to boost revenues, curb tax evasion and under-declaration of production at factories and also protect consumers from harmful and substandard goods.

“Application of the digital stamps for the excisable goods has enabled TRA to track actual production at factories and imports and eventually facilitated collection of requisite taxes and curb fake products in the local market. “My committee hence proposes the same system for other products to protect consumers from harmful products and also boost government revenues,” Mr Ndaki then suggested before the Parliament was officially dissolved by President John Magufuli last week.

The parliamentarian reasoned further that the ETS management system will play a crucial role in detecting smuggled products to protect local manufacturers against unfair competition.

“Our country faces a challenge of substandard and smuggled products which do not only deny the government of taxes but poses health risks to consumers, farmers and also creating unfair playing grounds for local producers,” he explained.

Data by TRA have shown that since the first phase for ETS management system was introduced for excisable products in January, last year, there has been considerable increase in collection of excise duty and Value Added Tax (VAT) compared to the same period in the previous years.

According to the figures by the taxman, collection of excise duties on spirits rose to 13.8bn/-, translating to an increase of 74.4 per cent, during the first quarter of 2020 as compared to revenue collected during the same quarter in 2019.

The 34.88trl/- budget for 2020/2021 presented by Dr Mpango shows that the government plans to spend 22.10trl/- for recurrent expenditure and 12.78trl/- for development projects.

To meet this target, full implementation of digital solutions is crucial to enable the government to collect more revenues as the country seeks to attain a middle-income economy by the year 2025.

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Author: DAILY NEWS Reporter

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