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FINN’S FACTS: Why TRA needs a clean up similar to that of BoT

Discussion in 'Jukwaa la Siasa' started by BAK, Dec 29, 2008.

  1. BAK

    BAK JF-Expert Member

    Dec 29, 2008
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    FINN'S FACTS: Why TRA needs a clean up similar to that of BoT


    A CLOSE friend of mine last week had to part with a cool 70,000/- to facilitate speedy payment of import duty for clearance of a car he had imported from Japan. Earlier, tax collectors at the Tanzania Revenue Authority (TRA) had hiked the import duty for the car by over 200 per cent, and still encountered some difficulties in paying the tax, which compelled him to pay the bribe.

    This kind of behaviour by some dishonest TRA staff encourages tax evasion and corrupt practices which have played a major role in making Dar es Salaam port inefficient. This also tarnishes the good image of the authority, but more importantly denies the government revenue.

    As more and more high profile cases of tax evasion are unveiled, the latest being the Aggreko 10bn/- controversy, it�s becoming increasingly evident that TRA needs overhauling. This kind of overhauling should resemble or even be more intense than the one which swept Bank of Tanzania (BoT).

    The cleansing of TRA should not target any particular hierarchy but involve the rank and file of the authority which has a good number of corrupt, incompetent employees who got their jobs not because of technical know how, but rather technical know who.

    Some corrupt TRA tax collectors and assessors have amassed wealth which is several times over their gross annual salaries and no state agency has held them responsible because past administrations treaded a laissez faires culture.

    As President Jakaya Kikwete's government seeks to put an end to use of public office to strike fortunes illegally, it's important that TRA be subjected to a thorough combing to rid it of individuals with questionable character.

    It's abnormal that people holding public office at different levels collude with multinational companies to evade taxes while burdening poor Tanzanians who are importing second hand cars for family use with punitive taxes.

    TRA has all the hallmarks of wrongdoers who have failed to repent hence the latest scandals. Its tax assessors and collectors have been very good at snarling at poorly earning struggling Tanzanians who they have the luxury of demanding bribes even for someone seeking to clear an unjustified import duty on a family car.

    This country cannot continue to rely on foreign taxpayers' money to build roads, railways, schools, hospitals and other vital infrastructure while our own revenue collectors have failed to collect government revenue from multinational corporations which are evading billions of shillings like Aggreko.

    The potential to collect over 500bn/- a month is still there and that's why when Finance and Economy Minister Mustafa Mkulo summoned senior TRA officials last September and demanded an explanation to poor revenue collection for months of July and August, a record 427bn/- was collected by end of September.

    Most of the people complaining against the record revenue collection mark by TRA, were none other than big corporations in the oil importation sector which have for years colluded with some employees of the authority to evade or pay less taxes.

    It's high time that the government should take a firm stand and clean up the mess at TRA as it is doing at BoT, instead of keeping the same faces at same or elevated positions and expect miracles in bringing sanity, integrity and professionalism.
  2. M

    MzalendoHalisi JF-Expert Member

    Dec 29, 2008
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    Sii naskia watapata Bonus kwa kuvuka malengo mwaka huu?

    Taabu ni kuwa Tz only 20-30% ya kodi ndo hukusanywa!
  3. Mwita Maranya

    Mwita Maranya JF-Expert Member

    Dec 29, 2008
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  4. K

    Koba JF-Expert Member

    Dec 29, 2008
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    Tanzania's rating in taxation survey drops, survey shows
    By Damas Kanyabwoya

    It has become more difficult for companies and other organisations to pay taxes in Tanzania than was the case last year, an international report says.

    According to the survey, Tanzania, which lags behind Rwanda and Uganda, dropped from position 104 to 109 among the 181 countries surveyed for the ease with which businesses pay tax.

    But Tanzania, which is ranked 109th, in the global Paying Tax 2009 report, fares better than the other two fellow East African Community partner states, Kenya and Burundi.

    The survey ranks Rwanda 56th and Uganda 70th. Kenya and Burundi are at positions 114 and 158, respectively.

    According to the report, the countries� prevailing high taxes and complex tax administration procedures result in low tax compliance as more businesses are forced to operate informally.

    Though Tanzania has dropped five rungs from last year's 104th global ranking, it maintains the same third position in the region.

    Indicators such as the total tax rate (the cost of all taxes borne by the company), the time taken to comply with major taxes, and the number of payments for major taxes in a country are used to measure how easy it is to pay tax.

    The report released by the World Bank, IFC and PricewaterhouseCoopers shows that in Africa, the best performing countries are Mauritius, followed by Botswana and South Africa.

    Tanzania came in the 24th position out of the 51 African countries covered. Tax revenues in Mauritius actually increased following reductions in tax rates.

    The survey measures all the taxes and government mandated contributions as they apply to the standardised business and have an impact on its income statements.

    These include the corporate income tax, social contributions and labour taxes paid by the employer, property taxes, property transfer taxes, dividend tax, capital gains tax, financial transactions tax, waste collection taxes and vehicle and road tax

    Economies that are ranked highly on the ease of paying taxes scale tend to have lower and less complex taxes with simple administrative processes for paying and filing tax returns, the report notes.

    In economies where taxes are high and the commensurate gains, in terms of services received in return, are low, many businesses simply choose to remain informal.

    The report shows that in Tanzania, the total tax rate as a percentage of profit, stood at 45 per cent, compared to 33.7 per cent, 34.5 per cent, 50.9 per cent, and 278.7 per cent in Rwanda, Uganda, Kenya and Burundi, respectively. The report found that Tanzania had the highest number of business taxes in the region.

    It was also found that employment taxes take a large chunk of the total tax rate in all the economies surveyed.

    Tanzanian experts said the report paints a fairer picture of the local taxation system. They said numerous taxes, which are relatively higher, repel taxpayers and it would be difficult to enforce compliance.

    A tax partner at PricewaterhouseCoopers in Dar es Salaam, Mr David Tarimo, said the high employment taxes phenomenon is was particularly relevant to Tanzania, where employers are burdened with a six per cent skills and development levy on payroll costs. Its social security contributions are also the highest in the EAC.

    The skills and development levy is only charged in Tanzania among the EAC countries.

    In recent years, he said, various stakeholders had made pre-Budget submissions proposing a reduction in employment tax costs, but to no avail.

    "A reduction in these costs would encourage more businesses to operate formally, thereby expanding the tax base," Mr Tarimo added.

    According to the tax expert, the challenge posed for the wider East Africa region in the run-up to the 2009 Budget is to consider reducing the current common corporate income tax rate of 30 per cent to 25 per cent.

    The latest survey draws from the Doing Business 2009 report that measures the ease of paying taxes for mid-size domestic companies in 181 economies, analyses tax systems and tracks related reform efforts.

    It includes examples of how 18 countries that have made use of data from the previous global Doing Business reports and provides insights into discussions with governments and other stakeholders generated by earlier Paying Taxes reports.

    Another expert, Mr Michael Maro, said Tanzanian taxes were �beyond the optimum level�. This is the level where compliance is maximum. He said taxes were higher and numerous, making people unable and unwilling to pay voluntarily.

    "At the current tax rates, talk of increasing tax base is useless," he said.

    It was high time the Government thought of reducing taxes that affect the whole economy to boost productivity and the economic growth, he proposed.

    Contacted for comment, the director for Taxpayer Services and Education of the Tanzania Revenue Authority (TRA), Mr Protas Mmanda, said: "I have not yet read the report so I request that you give me time to go through it, before commenting on it."

    Globally, the Maldives is ranked first in the ease of paying taxes, followed by Qatar, Hong Kong/China, the United Arab Emirates and Singapore. The worst country is Belarus, followed by Ukraine, Congo, Central Africa Republic and Venezuela.

    The ease of paying tax has nothing to do with the size of an economy. Tanzania, for example, outranked bigger economies such as Japan, Italy, Poland, Brazil, India, and Mexico.
  5. I

    Iga Senior Member

    Dec 30, 2008
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    Unajua nini? Kuna wakati Mwalimu Nyerere alituonya tusije kuwa na watu tunaowatuma kwenda kijiji cha mbali chenye chakula kutuombea chakula sisi tuliobaki kijijini hapa Tanzania halafu jamaa wakaamua kuselea huko huko Ughaibuni!

    Inavyoelekea kwa mashangingi na mahekalu wenzetu wa TRA wanayoshusha wao sio wenzetu tena. Na wamebaki ugenini kwenye fedha ya mshiko na sisi tuko maskani hoi bin taabani.