Taxation and a strong tax system may contribute to improved governance through three maximum channels. Taxation establishes a fiscal social contract between citizens and the taxing state. Taxpayers have a legitimate cause to expect something in return for paying taxes and are more likely to hold their governments to account. Governments have a stronger incentive to promote economic growth when they are dependent on fair taxes. Taxation may be good however, when the extremes are beyond reasonableness, countries are bound to break the back of the economies they aspire to build and citizens they swore to protect.
Poor economic and taxation policies, compounded by the complexity of tax administration and the low understanding of the tax systems contribute significantly towards low tax morale and poor tax compliance. As a consequence the tax system is retrogressively unfair, prone to corporate avoidance and evasion. The government revenue collections have remained low to GDP and insufficient to sustain service delivery and development. Governments borrow heavily and are highly indebted
While governments are pressed to meet new tax revenue generation targets to finance increasing priorities. There is concern that the imposed taxes are widening the income gap between the poor and rich. Moreover, the increasing taxation of vital social services is exacerbating social-economic injustice. Consequently, between 2023 and 2024 there were tax protests in Uganda, Kenya and Tanzania.
At international level there is poor capacity of government to engage in international trade and tax debates and multilateral processes that affect trade and taxation of international trade and investments. The international trade and taxation system has been quite complex and at times working against Tanzania’s revenue objectives. There is wide spread resource leakage through unfair tax practices and tax dodging and illicit capital flight mechanisms which deny the country acute revenues to finance its development aspirations. Reputable organisations such as Tax Justice Network Africa and the Global Financial Integrity report the cumulative loss in revenues due to illicit financial flows, tax avoidance and evasion in East African countries is valued in billions of dollars. These resources if stemmed could be sufficient to finance public expenditure and development. The government’s capacity to engage internationally is still weak.
Citizens have no capacity to effectively participate in the economic governance and fiscal policy processes. Despite the good intentions outlined in Tanzania’s trade and fiscal policies, there is struggle between balancing the government revenue maximisation objectives and the private sector growth as engines of the economy. The private sector and citizens complain of high taxes, repressive and unpredictable fiscal regimes and a colossus of non tariff barriers affecting trade and business yet government is still faced with low revenues.
There are new frontiers to taxation of the expanding digital and green economies. Both the government and citizen’s knowledge and capacity to engage in these new frontiers is still low.
Under this project we undertake activities promoting Tax Justice, Trade Justice and Investment Facilitation via:
- Short research and Analysis on tax and development
- Convenings in the form of webinars, clinics and tax policy labs,
- Convening in the form of webinars, trade and investment policy clinics and labs-for example AfCTA
- Engage in national and regional tax justice movements, advocating for fair taxation and reforms in tax administration
- Engage in national and regional trade justice movements, advocating for fair trade and reforms in international trade system
- Trade and Investment Facilitation
Fundraising, Resource Mobilization and Partnerships:
GEPC aspires to be a well-resourced and sustainable organization. We are actively seeking for partners, donors and to support our work. We are actively looking for partners to support, sponsor or partner with us in delivering the projects under this program.
For more about this program contact us via: Governance and Economic Policy Centre; Tel: +255 754 844410/ +254 717 872034, Email: info@gepc.or.tz or moses@gepc.or.tz Website: www.gepc.or.tz