Either directly or indirectly, we pay taxes. We pay taxes when we buy fuel for our cars, generators or lanterns at home. There are taxes on electricity. We pay taxes when we buy clothes and shoes. There are several taxes embedded in the prices we pay for the foodstuffs. There are also taxes on the water we drink, specifically the bottled water. You probably have heard this old phrase several times: "In this world, nothing can be said to be certain, except death and taxes". With the prevalence of consumption taxes such as VAT around the world, the phrase is even truer now than before. Of course, the government needs tax revenue to be able to deliver public services. Maintaining peace and security, construction of roads, provision of health services and provision of free education just to name a few.
But there are several aspects of the tax system that can affect you or your economic activities. It could be the tax rate. It could also be the tax base. That is what or who to tax. Should the SMEs be taxed? How should the informal sector be taxed? Another aspect that can affect you is how a tax is administered or collected. You may not be happy with some of these tax aspects or you probably believe that there is a better way more tax revenue can be collected in Tanzania. And, maybe, somehow you are not directly affected by taxes. However, as a good citizen, the fact our budgeted tax revenue cannot fully fund the budgeted recurring expenditure probably should be enough to concern you. In the budget year 2019/2020, the budgeted tax revenue (19.1 trillion shillings) cannot fully cover for the budgeted recurrent expenditure (20.9 trillion shillings).
So, the question is whether you, either as an individual or organization, can influence the tax reforms. Yes, you can influence the tax system and there are several ways to do it. Directly and indirectly. Also, formally and informally. In this article I briefly highlight one of the formal channels, as we start the new year 2020, you can resolve to use. It is through the Task Force on Tax Reform.
Task Force on Tax Reform
There is a Task Force on Tax Reform (“Task Force”) organized at the Ministry of Finance and Planning. Task Force receives, hears and deliberates on various tax reform proposals from across the range of stakeholders and thereafter makes recommendations to the Minister of Finance and Planning.
Normally, the Task Force receives tax reforms proposals from around December each year to around mid-February of the following year. So, now is the time to write and submit your proposals for the fiscal year 2020/2021. In the notice issued by the Permanent Secretary - Treasury, recently, stakeholders (including you, of course!) are invited send their tax reform proposals to the Task Force by 10th February 2020 (within the next 30 days from now). Your proposal should, among other things, state the regions or taxpayers who will be affected and the way they will be affected (positively or negatively), the impact to the economy and government revenue both short and long term and how your proposal will help the government achieve its overarching objectives. And in case your proposal entails a reduction of government tax revenue, you must also indicate how the government can offset the resulting shortfall. After receiving proposals, the Task Force also invites stakeholders to make presentations and discuss their submissions. Again, this interactive stage is a good opportunity to make your case for tax reforms you proposed.
Shabu Maurus, Tax Partner, Auditax International.