In developing countries like Tanzania, and mostly due to rapid population increases, there is an increased urgency to improve on the mobilisation of domestic resources for vital service delivery. Improved mobilisation of domestic resources is core towards the realisation of the Sustainable Development Goals and is recognised as crucial in enabling developing countries to graduate from aid. The need to raise more tax and strengthen revenue mobilisation in most countries, especially developing ones like Tanzania is, therefore, an important component in the process of realising the SDGs.
Taxes are used to fund various government activities including social goods and service delivery to secure the livelihoods of citizens and mitigate inequalities. With Tanzania’s tax-to-GDP ratio standing at a mere 12% not only is this well below the sub-Saharan average, but it is also well below the minimum threshold of 15% considered necessary to finance even the most basic of state functions such as health and education. Thus, increasing tax-to-GDP ratios by 5% in the medium-term (around five years) would be an ambitious, yet realistic way forward.
While we commend the existing efforts including digitalization of the tax systems, enhancing the capacity of tax administrators and improved taxpayers’ education In Tanzania, we also believe that much more can be done to increase the tax base and bring in more taxpayers and at the same time put in place strategies that prevent loss of revenues from the existing sources. This submission calls for the Government to consider addressing the issues raised in this document to help increase revenues from domestic sources and improve State’s ability to implement its development projects.