This week President Samia Suluhu Hassan gave a 2tri/- tax revenue collection target to the Ministry of Finance and planning that must be attained by December this year.
The Head of State issued the directive on Thursday in Dodoma during the swearing-in ceremony of new Chief Secretary, Ambassador Hussein Kattanga and newly-appointed and reshuffled ministers and deputy ministers.
President Samia said the Finance Ministry’s approach in tax collection was counterproductive and it was killing off businesses and scaring away investors.
Tax collection by Tanzania Revenue Authority (TRA) has undergone some reforms, all of which targeted to increase government revenue.
Use of Electronic Fiscal Device (EFDs) toped the fifth phase government agenda in its efforts to reform tax revenue collection system.
Experts in taxation say EFDs reduce the time it takes to prepare sales report, secure tax information for auditing purpose and transaction and ensure tax rate to be paid by the taxpayers.
Despite these advantages some traders have been avoiding using the gadgets, depriving the government of its rightful revenue.
At the start of enforcing the measure in the country, some challenges were encountered such as high prices of EFD machines, faint fiscal tax invoice receipts, EFD’s network problem, lack of taxpayer’s education on the application of the gadgets and insufficient suppliers of the devices.
Understandably, majority of these challenges were addressed and some are still being worked on by the government.
However, surveys conducted in major trading areas such as Kariakoo in Dar es Salaam have revealed that some traders deliberately avoid using the equipment as a strategy to attract buyers.
What they do is that when the customer asks for a price of a particular product they (traders) give two prices- the lower price that does not involve issuing EFD receipt and the higher price thatn involves issuing EFD receipts.
Given the fact that customers always prefer purchasing commodities at rather lower prices they resort to purchase commodities at prices that don’t involve EFD receipts, a practice that denies the government of its rightful revenue.
One day, when Vice President Dr Philip Mpango was serving as Minister for Finance and Planning, he stormed one of the fuel stations in Dar es Salaam to establish if indeed oil traders were complying with the government order that required them to use EFDs.Very unfortunately the trader was not using the machine, something that infuriated the minister.
This anomaly must be rectified if indeed the 2tri/- revenue target is to be reached. In other countries even buying a single bottle of beer at a pub/bar involves EFD machine, meaning that tax evasion loopholes are sealed.
Yes, it is indisputable fact that the Ministry of Finance and Planning must come up with new strategies to identify new sources of tax revenue (widening tax base) but enforcement of EFDs use is a must if we want to reach a 2tri/- mark.
Equally important is the need to continue sensitising the public on the significance of paying tax for the country’s development. Standard Gauge Railway (SGR), Nyerere hydropower, Tanzanite Bridge and other services such as health, education, water, power and other infrastructure projects need money.
Tanzanians should understand that paying tax is a civic duty.