Montreal, Quebec, June 15th, 2011– Hilbroy Advisory Inc. (DeutcheBörse: 2H0) Hilbroy Advisory Reports: TANZANIA Revenue Authority (TRA) has defended the envisaged 17 per cent of GDP in tax collections, saying the target was attainable because the national economy was set to grow.
With growing economy, TRA said revenue collection will grow as well because output is the good determinant of tax collections.
TRA’s Deputy Commissioner-General Mr. Placidus Luoga told the ‘Daily News’ in an interview on Monday that after all the targeted tax collection remains the same as that of last year’s 18 percent.
“Though we failed to meet our last year target, effort to meet our projection is there and it’s very possible that we will attain the new projections,” Mr. Luoga said confidently.
The economy is projected to grow by 7 percent, after slowing down to 6 per cent in 2010. TRA has based attaining their goal on the GDP growth, which also ups government revenues.
Reading 2011/12 budget estimates in the Parliament last week, the Minister for Finance and Economic Affairs, Mr. Mustafa Mkulo, said the government’s projection was to raise 17.2 per cent of GDP in taxes.
The government will continue to strengthen domestic revenue collections by deploying policy and administrative measures on both tax and non-tax revenues as well as widen revenue bases,” Mr. Mkulo told the Parliament.
The idea is to cover large portion of unharnessed revenue potentials. The amount projected to be collected is 6.77trn/ which is equivalent to 17.2 per cent of GDP.
But while the government projected a new ambitious figure, it failed to collect its revenue in 2010 by almost 500bn/- blaming poor economic performance driven by high fuel price, drought and global financial crisis.
“The tax base remains rather narrow, collection mechanisms are inefficient and tax evasion and avoidance as well as exemptions are many” said Mzumbe University Dar es Salaam’s Business School Dr Honest Ngowi.
He hinted on the possibilities of continuous revenue target missing due to high fuel prices and chaotic status of electricity in Tanzania, among other things.
Nevertheless, the government has a possibility of rising revenue after including Non-Governmental Organizations (NGOs) on tax bracket, previous these organizations were exempted from paying taxes.
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