DAR ES SALAAM: ANALYSTS have commended President Dr Samia Suluhu Hassan’s decision to constitute a commission for addressing various tax disputes, noting that it will boost compliance, tax base and collection.
On Wednesday, the Head of State formed the Presidential Commission on Tax Reforms, tasked with reviewing and offering advice on tax matters.
She appointed former Chief Secretary, Ambassador Ombeni Sefue, to chair an eight-member commission.
According to a statement issued by Chief Secretary Dr Moses Kusiluka, other members include the former Governor of the Bank of Tanzania (BoT), Professor Florens Luoga; former Controller and Auditor General (CAG), Professor Mussa Assad; and retired Secretary General and Ambassador, Maimuna Tarishi.
Others in the list are Senior Lecturer at Zanzibar University (ZU), CPA Aboubakar Mohamed Aboubakar; retired Ambassador and Legal Advisor, Ambassador Mwanaidi Maajar; tax expert and former Head of the Tax Advisory Department at PwC, Mr David Tarimo and Commissioner of Foreign Finance at the Ministry of Finance and former Chief Commissioner of the Tanzania Revenue Authority (TRA), Mr Rished Bade.
Dr Samia made the decision to form the team when chairing the 15th Tanzania National Business Council (TNBC) meeting held in Dar es Salaam on Monday.
During the meeting attended by Vice-President Dr Philip Mpango, President of Zanzibar Dr Hussein Mwinyi, Prime Minister Mr Kassim Majaliwa as well as ministers, permanent secretaries and the private sector representatives, the Head of State expressed the determination of her government to eliminate tax administration challenges facing traders and investors.
The committee members are expected to come from both the government and the private sector. They will be tasked to analyse the tax system in detail and provide recommendations to meet the country’s needs.
Some of the challenges raised by private sector stakeholders during the meeting include the closure of bank accounts, unauthorised seizure of funds and the shutdown of Electronic Fiscal Devices (EFD) machines.
A Dar es Salaam based Tax Analyst Mr Sinda Mwita said Dr Samia’s decision to form committee for reviewing tax system is commendable and would definitely boost compliance, tax base and collection.
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“To boost tax collection for financing development projects, building friendly tax system is of paramount importance. Thus, President Samia’s decision to form committee to re-examine tax system is welcomed and will shape the country’s tax administration system,” he said.
Mr Mwita said Tanzania needs to develop an affordable, fair, simple and transparent tax collection system that will boost collection for financing development projects.
He said the tax administration systems in many African countries are unfair and unfriendly, prompting taxpayers to evade taxes and others running or closing businesses.
For example, most of the Tanzania Revenue Authority (TRA) managers work to meet the given tax collection targets, sometimes forcing them to use unfriendly means to reach the set-up goals.
“Failure to use good customer care is really discouraging compliance among tax payers, reducing tax base and low revenue collection,” he noted.
He said the committee is therefore expected to create fairness and equity in tax payment among tax payers and will boost collection and help the country meet development goals.
On his part, an economist-cum-investment banker, Dr Hildebrand Shayo said, “The committee will give a fresh look at the county’s tax administration system by analysing specific laws and regulations.”
He added, “The re-examination of the tax system has come at the perfect time and it will impact positively on the future of the tax system for the development of the country.”
He said President Samia would prefer to see Tanzania with a tax system that is more straightforward, equitable and transparent.
This would also aid in expanding the tax base, which has been a recent worry due to the development of Information and Technology systems that, on closer inspection, may threaten the established tax strategies or leave specific sectors untaxed.
Dr Shayo said redesigning the tax system and its administration, bolstered by a careful examination of relevant laws and regulations, can, if done correctly, promote an integrated approach to various taxes, which are currently characterised by uneven enforcement and service functions, which, when applied, render the system ineffective.
He said corporations are taxed differently worldwide depending on where a business is located or resides and the tax laws they choose to abide by.
Various taxes, such as income tax, capital gains tax, property tax, progressive tax, proportional tax, VAT and many more, even taxing the informal sector, require different legislations, strategies and approaches.
“Perhaps this is the situation in which Dr Samia would want to see strong legislation and administration put in place to encourage taxpayers to see why paying taxes is a good thing rather than a burden,” he noted.
He added: “The formed committee can recommend appropriate steps to build capacity, if required and help enhance the efficiency and transparency of tax administrations going forward. This will help strengthen and expand the tax base and reduce tax evasion and avoidance that currently undermines government revenue collection,” he said.
