TRA targets tax evaders Tanzania revenue Authority Commissioner General Harry Kitillya display the new electronic fiscal device in Dar es Salaam yesterday. PHOTO/ FIDELIS FELIX By Al-amani Mutarubukwa The Citizen The Tanzania Revenue Authority (TRA) has embarked on new measures to meet targets.They include the introduction of electronic fiscal devices at all businesses, which are required to pay value added tax (VAT). The construction of the national ICT broadband backbone and the national identity cards project are also expected to expand the tax base. TRA commissioner-general Harry Kitillya told journalists in Dar es Salaam yesterday that the machines would be linked to the authority's central data system to monitor traders' transactions. The machines will be sold at between Sh1 and Sh5 million each, depending on the type, and will be installed from next month in accordance with the supervision and monitoring of the VAT regulations 2010. However, the authority says that users will not be involved directly in acquisition costs of the machines, as they will be compensated through an "input tax" mechanism. The measure has been introduced in the wake of reports that TRA is likely to miss its revenue collection target for the second year. Last year, it missed the tax revenue collection target by 10 per cent and this year's projections show that collections might fall short of the projection by at least six per cent. By the end of April TRA had collected Sh3 trillion, missing the target by 7.4 per cent. Mr Kitillya hopes the new machines would help the authority to detect traders who were initially evading paying VAT. "The system as it has shown success in Kenya, Greece and Italy where it is currently being used," he said. The new system is expected to be effective because the electronic cash machines that were initially recommended by the authority failed since many traders continued to sell items without issuing receipts. The minister for Finance and Economic Affairs, Mr Mustafa Mkulo, recently said the domestic revenue between July last year and March this year stood at Sh3.5 trillion - 8.7 per cent less than the projected amount. He attributed the shortfall to the global recession. Economists have been faulting the government for overestimating revenue targets. They also said that issues related to effects of global economic crisis were lightly factored in the budget. "During the budget preparation, it was assumed that the global economic crisis could easily pass without affecting our revenue collections so I'm not amazed to see the targets being missed," business leader Felix Mlaki told The Citizen. A University of Dar es Salaam economics lecturer, Prof Humphrey Moshi, said being overenthusiastic over economic recovery might be detrimental to the country's planning "Even in the developed world, economic recovery is at its infancy. It's like a sprouting seed that can easily die if the sun becomes hot. It's like a child who is only creeping but is yet to stand up and start walking.... we will be making a grievous mistake to base our planning on such assumptions," he noted. Unveiling the Sh11.1 trillion tentative budget for 2010/11, Mr Mkulo said about Sh6 trillion of the estimates would be sourced domestically. However, speaking at a Parliamentary Committee after Mr Mkulo presented the estimates, Ms Devotha Likokola (Special Seats-CCM) urged TRA to involve stakeholders in identifying new sources of domestic revenue. "TRA should train staff in tax collection and administration to enable them to maximise efficiency in revenue collection," she said. The country, with the population of 40 million, has about 600,000 taxpayers. However, Mr Kitilya said yesterday that the figure could be raised to about three million if a modern mechanism is established to trace and identify transaction of every person. "Except children and old people, nearly 80 per cent of Tanzanians are subject to pay tax on every transaction made, but due to inefficiency of our systems we can't locate all of them," he said. Some economists have been criticising the tax exemption policy, saying it has been abused. The nation will forgo about Sh3 trillion in exempted taxes in the current financial year. Moreover, TRA is reported to have forwarded suggestions to the government to broaden the tax base.