Govt must explore other sources of revenue

By Editor

Editorial Cartoon

years now taxpayers, especially workers have been bitterly complaining over huge taxes slashed from their salaries in the name of Pay As You Earn ( PAYE) or Income Tax.


The same ‘song’ which has now become a cliché is again being heard this time when the government prepares to table its new budget in Parliament in the next few weeks. According to Minister for Finance Saada Mkuya, the government is expected to spend Sh19.6 trillion in 2014/15 financial year.

When marking the International Labour Day on Thursday workers once again lodged the same complaint to President Jakaya Kikwete, prompting him to promise them that the tax imposed on workers’ pay would be revisited to see the possibility of slightly reducing it.

Going by available records it would be recalled that such presidential promise was also made last year but its implementation thereafter benefited low income earners, only those receiving the minimum wage of Sh170,000 a month, to be precise.

While paying tax is a civic obligation under the country’s constitution, workers in public and private sector organisations have always found themselves carrying the burden, leaving other people in other sectors either untouched or paying little.

In April last year Kisesa MP Luhaga Mpina came up with shocking revelation on how much the government was losing in revenue collections just for its failure to judiciously use its machinery to seal loopholes of tax evasion.

It was unbelievable to learn from the MP that the government was losing a whopping Sh 2.780 trillion ( $1.685 billion) annually as a results of its failure to collect what it deserves from potential taxpayers.

Giving a breakdown the CCM legislator said various studies by a number of institutions within and outside the country had demonstrated that Tanzania was losing annually Sh525 billion in revenue through tax evasion within the mining sector alone.

Within the telecommunication industry, he said the government was losing a whopping Sh600 billion through tax evasion as well, as it did in the fishing industry where some Sh362bn was slipping through ‘white-collar’ thieving hands. The informal sector meanwhile broke the record, as data showed the government was losing Sh1.3 trillion annually.

Tax exemptions was another area where the government was losing billions of revenue, as data from Controller and Auditor General (CAG) Ludovick Utouh showed that by 2011/2012 financial year exemptions had reached Sh1.8 trillion.

It is an undeniable fact that for years the government failed to cast the net to collect revenue from middle class and small-scale businesspeople as well, prompting workers to complain. According to the remittance arrangement, they cannot evade it (PAYE), while with the use of Electronic Fiscal Devices (EDF) things might now change for the better.

While the public waits to see what is in the briefcase of the finance minister we don’t expect to find dependency on same traditional sources of government revenue this time around. Let‘s think outside the box. 

SOURCE: THE GUARDIAN