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| TRA Chief Harry Kitilya |
Tanzania loses one billion US dollars (approximately 1.6tri/-) each
year from tax evasion, capital flight and incentives offered to local and
foreign investors, according to a new report launched in Dar es Salaam on
Tuesday.
The amount in question is almost two times the 621.6bn/- budget for
water during the current fiscal year. Reached for comment on Tuesday, the
Tanzania Revenue Authority (TRA)’s Commissioner General, Mr Harry Kitilya, said
he could not comment on the findings of the report as he had not seen it.
“I have not seen the report and thus I am not in a position to comment
on its findings,” said the TRA’s boss in a telephone interview.
The 68-page report titled; “The one billion dollar question: How can
Tanzania stop losing so much tax revenue,” shows that a vast amount of
potential tax revenue that could be used to reduce poverty does not end up in
the government coffers but rather leaves the country.
The study was commissioned by the Interfaith Standing Committee on
Economic Justice and Integrity of Creation (ISCJIC), comprising religious
leaders from the Christian Council of Tanzania (CCT), Tanzania Episcopal
Conference (TEC) and the Muslim Council of Tanzania (Bakwata).
Speaking at the launching ceremony in Dar es Salaam on Tuesday, ISCJIC
Chair, Bishop Paulo Ruzoka, expressed concern that the money which could be
used to improve the welfare of ordinary Tanzanians was being smuggled abroad.
“It is high time incentives and tax waivers to investors were critically
analyzed to establish who the major beneficiaries are,” Bishop Ruzoka
challenged.
The cleric also called for strict monitoring of revenues to enable the
country to get rid of dependence on foreign aid.
Presenting the findings of the
report, Dr Honest Ngowi said that Tanzania’s tax potential stands at 21 per
cent of the gross domestic product (GDP) but collects only 16 per cent of it.
Dr Ngowi was among three researchers who conducted the study.
“Incentives and exemptions were introduced in the 1990’s to woe
investors at the time when the country was transforming from state to private
led economy and the investment climate was poor. “Now that the investment
environment has improved we need to ask ourselves whether the waivers are still
relevant.
And if so, how are these incentives benefiting small-scale investors
like artisan miners?” the don queried.
Dr Ngowi, also a lecturer of economics
at Mzumbe University, proposed that incentives and tax waivers to investors
should be based on productivity and potential to create jobs rather than
applying the “one blanket fits all notion.”
The don said the study found that only 1.5 million Tanzanians out of 15
million potential taxpayers, pay taxes.
It was also revealed in the study that
large and multinational companies were the major beneficiaries of tax waivers
and incentives, whereas religious organizations accounted for just 0.05 per
cent of all tax exemptions.
Source: The Daily News, http://dailynews.co.tz, reported by Alvar Mwakyusa
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