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- Jul 30, 2008
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To tap into real estate for more revenue, Mulls regulatory body for the sector
Finance and Planning Minister, Dr Philip Mpango
The government will from next financial year impose tax on the real estate sector in a move aimed at expanding the tax base and reducing foreign dependency on funding the budget.
The move will also see more tax being collected from non-tax avenues including tourism, forests and tourist visas.
The government is already drafting a Real Estate Agency Bill to be tabled in the National Assembly this year.
The newly appointed Finance and Planning Minister, Dr Philip Mpango, told The Guardian on Sunday that the government has been losing a lot of tax in the sector which would have helped to fund various development projects.
Mpango said however that revenue collection from real estate was hindered by lack of legal ownership of properties to enable smooth tax payment.
“The real estate sector is a great opportunity for the government to improve tax collection. For a long time the government has failed to do so because owners fake property ownership,” he said.
The minister said the sector had the potential to boost revenue, adding that there was therefore need to address the property ownership issue if the government really intended to benefit from revenue collection from it.
He said the faking of names of owners on title deeds made it hard for the tax authorities to know the real owners of properties and so hindered tax collection efforts.
“My office, in collaboration with the Tanzania Revenue Authority (TRA) has launched an investigation to identify real owners of properties with a view to collecting due tax,” the minister said.
“We plan to start collecting tax from the real estate sector with effect from the forthcoming financial year. It is one of the areas where huge revenue collection is being lost. Tapping into the sector would go a long way to boosting revenue,” he added.
Dr Mpango indicated that the government would introduce a better system in the registration of properties, saying tax from the sector was being lost through unregistered properties.
“We are currently undertaking the laborious task of identifying the real property owners because these people are responsible for denying the government huge sums in revenue, which would have come in handy in funding development projects for the people,” he said.
“We are devising effective strategies which will force each property owner to pay due tax.We have come to realize that effective tax collection from the sector will give remarkable boost to the country's economy,” the minister added.
TRA Acting Commissioner General Alphayo Kidata, for his part, reiterated that a Real Estate Agency Bill was currently being crafted and would be tabled in the National Assembly this year.
The TRA chief said the Bill, if passed into law, would facilitate the collection of revenue from the real estate sector which, in turn, would cut donor dependency in budget support.
“Plans are under way to table the Bill in Parliament in due course. It will compel property owners to pay tax and empower TRA to prosecute defaulters,” Kidata said.
In a related development, Lands, Housing and Human Settlements Development Minister William Lukuvi has directed the ministry’s top leadership to prepare a Real Estate Regulatory Authority Bill draft and submit it to his office as soon as possible.
Lukuvi told reporters that creation of a regulatory body was vital for controlling the booming construction sector.
Lukuvi noted that there was frantic competition in the construction of high-rise buildings in towns and cities across the country, adding that there was a need for a regulatory body of the sector as currently the developers decided when, what and where to construct and even how much rent to charge.
But an expert in taxation who preferred anonymity said the government could do away with donor dependency entirely in its budget if it explored all sources of revenue.
Giving an example, he said there were a number of people owning social halls in urban areas who paid little tax or did not pay a single penny to the government.
“During weekdays and weekends social halls are occupied with functions, such as workshops, seminars, wedding ceremonies, kitchen parties, send-offs, etc. Very unfortunately the government earns nothing,” he said.
Private parking yards is another area where the government could come up with a special arrangement to collect tax. He said there were people who had established parking yards in residential areas where total turnover was huge in one month.
Given the goal set by the government to collect tax amounting to Sh2 trillion per month, the nation could tremendously reduce donor dependency.
Simple calculations show that if the goal of collecting Sh2trillion was realized, the government would hit the Sh24 trillion mark. The current 2015/2016 budget stands at Sh22.4 trillion.
However, Minister Mpango says even if such revenue target was met donor dependency might not be eliminated entirely, especially for mega projects involving infrastructure, such as railways and harbours.
SOURCE: GUARDIAN ON SUNDAY
Finance and Planning Minister, Dr Philip Mpango
The government will from next financial year impose tax on the real estate sector in a move aimed at expanding the tax base and reducing foreign dependency on funding the budget.
The move will also see more tax being collected from non-tax avenues including tourism, forests and tourist visas.
The government is already drafting a Real Estate Agency Bill to be tabled in the National Assembly this year.
The newly appointed Finance and Planning Minister, Dr Philip Mpango, told The Guardian on Sunday that the government has been losing a lot of tax in the sector which would have helped to fund various development projects.
Mpango said however that revenue collection from real estate was hindered by lack of legal ownership of properties to enable smooth tax payment.
“The real estate sector is a great opportunity for the government to improve tax collection. For a long time the government has failed to do so because owners fake property ownership,” he said.
The minister said the sector had the potential to boost revenue, adding that there was therefore need to address the property ownership issue if the government really intended to benefit from revenue collection from it.
He said the faking of names of owners on title deeds made it hard for the tax authorities to know the real owners of properties and so hindered tax collection efforts.
“My office, in collaboration with the Tanzania Revenue Authority (TRA) has launched an investigation to identify real owners of properties with a view to collecting due tax,” the minister said.
“We plan to start collecting tax from the real estate sector with effect from the forthcoming financial year. It is one of the areas where huge revenue collection is being lost. Tapping into the sector would go a long way to boosting revenue,” he added.
Dr Mpango indicated that the government would introduce a better system in the registration of properties, saying tax from the sector was being lost through unregistered properties.
“We are currently undertaking the laborious task of identifying the real property owners because these people are responsible for denying the government huge sums in revenue, which would have come in handy in funding development projects for the people,” he said.
“We are devising effective strategies which will force each property owner to pay due tax.We have come to realize that effective tax collection from the sector will give remarkable boost to the country's economy,” the minister added.
TRA Acting Commissioner General Alphayo Kidata, for his part, reiterated that a Real Estate Agency Bill was currently being crafted and would be tabled in the National Assembly this year.
The TRA chief said the Bill, if passed into law, would facilitate the collection of revenue from the real estate sector which, in turn, would cut donor dependency in budget support.
“Plans are under way to table the Bill in Parliament in due course. It will compel property owners to pay tax and empower TRA to prosecute defaulters,” Kidata said.
In a related development, Lands, Housing and Human Settlements Development Minister William Lukuvi has directed the ministry’s top leadership to prepare a Real Estate Regulatory Authority Bill draft and submit it to his office as soon as possible.
Lukuvi told reporters that creation of a regulatory body was vital for controlling the booming construction sector.
Lukuvi noted that there was frantic competition in the construction of high-rise buildings in towns and cities across the country, adding that there was a need for a regulatory body of the sector as currently the developers decided when, what and where to construct and even how much rent to charge.
But an expert in taxation who preferred anonymity said the government could do away with donor dependency entirely in its budget if it explored all sources of revenue.
Giving an example, he said there were a number of people owning social halls in urban areas who paid little tax or did not pay a single penny to the government.
“During weekdays and weekends social halls are occupied with functions, such as workshops, seminars, wedding ceremonies, kitchen parties, send-offs, etc. Very unfortunately the government earns nothing,” he said.
Private parking yards is another area where the government could come up with a special arrangement to collect tax. He said there were people who had established parking yards in residential areas where total turnover was huge in one month.
Given the goal set by the government to collect tax amounting to Sh2 trillion per month, the nation could tremendously reduce donor dependency.
Simple calculations show that if the goal of collecting Sh2trillion was realized, the government would hit the Sh24 trillion mark. The current 2015/2016 budget stands at Sh22.4 trillion.
However, Minister Mpango says even if such revenue target was met donor dependency might not be eliminated entirely, especially for mega projects involving infrastructure, such as railways and harbours.
SOURCE: GUARDIAN ON SUNDAY
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