Tanzania loses over $4 million each year to corruption and fraud in tax collection, and a faster rollout of electronic collection systems could plug budget gaps
DAR ES SALAAM (Thomson Reuters Foundation) — Tanzanian lawmakers are urging the government to speed up the electronic collection of revenues to prevent the loss of millions of taxpayer dollars each year to corruption and outright theft.
Dubbed ‘Power of the Purse’, the new electronic system would help officials track down revenues which never reach the treasury due to widespread corruption, including the doctoring of paper receipts, lawmakers said. Officials also want to improve electronic tracking of government spending.
Tanzania loses about Tsh.700 billion ($4.37 million) a year to a porous system which allows tax evasion and mismanagement of public finances, spurring foreign donors to slash budget support aid three years ago. The move to electronic tax collection and budgeting is part of a broader push internationally to use technology to improve government accountability.
“We have instructed the government to immediately start collecting revenue from central and local government sources using electronic fiscal devices,” Zitto Kabwe, chairman of a parliamentary oversight committee on public accounts and deputy leader of the opposition in the parliament, told Thomson Reuters Foundation.
The Tanzania Revenue Authority (TRA) projects it will collect Tsh. 9.5 trillion ($5.8 billion) in the 2013/14 fiscal year (July-June), a 19.9 percent rise from 2012/13 when tax collection rose by 16 percent.
The Electronic Fiscal Device is a programme that allows businesses to manage and analyse their sales and stock control electronically. The secure device, designed by the TRA, then calculates total turnover and government taxes due under each revenue category.
The TRA has also launched an electronic system for filing tax returns, and is working with the mobile networks to enable customers to pay their income taxes by phone. Tanzanians can already use their mobile phones to pay certain fees such as those for motor vehicle licences. The TRA also plans to roll out applications for citizens to monitor how government revenues are collected and spent.
Migrating faster to the new electronic system, which was mandated by parliament in July 2010, would ensure that government revenues continue to grow and that public institutions can be effectively audited, Controller and Auditor General Ludovic Utouh said. “Our office only gets to audit and issue statements of revenue collection when the funds reach the Treasury, but this is after the records have been tampered with,” Utouh told reporters in Dar es Salaam recently.
About 30 percent of Tanzania’s budget is currently financed by foreign donors, and over the past seven years it has received about $5 billion in general budget support. Donors have repeatedly questioned the sluggish pace of the country’s reforms and fight against corruption, and in the 2010/11 fiscal year slashed $220 million from their general budget support funds. Kabwe said improved revenue collection would bridge yawning gaps in the budget which have resulted in higher taxes on basic necessities.
In a bid to make government business more open, Tanzania has joined the Open Government Partnership, a multilateral initiative to promote transparency in government spending and finances, to empower citizens to fight corruption and harness technologies to strengthen effective governance.
According to a draft country plan submitted to the OGP secretariat, the government has pledged to increased access to information and disclosure about its programmes and to publish data on certain priority areas. President Jakaya Kikwete vowed to improve governance, transparency and accountability when he took office.
“We will respect the rule of law and the principle of separation of powers between the Executive, the Legislature and the Judiciary. We will strengthen the public service and fight social ills without fear or favour," he said in his maiden speech in 2005.
The Open Government Partnership holds a meeting in London at the end of October to review country progress.
((Editing by Stella Dawson ))
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