Mtumbatu
JF-Expert Member
- Apr 27, 2012
- 363
- 171
Tanzania Revenue Authority commissioner general Harry Kitilya at midweek called a news conference in his office to explain why the tax collectors put levy a surcharge on goods originating from Zanzibar, where his explanations left some areas unresolved.
The basic explanation the commissioner general gave was that taxation on imports was low in Zanzibar, which is there was an additional charge imposed on goods entering from Zanzibar on account of the low taxes there.
It is arithmetically correct but it also illustrates why Tanzania is a negative, bad place to do business, and evidence why taxation is a ‘no growth' panacea.
The motto of the revenue authority as well as the government generally is that taxation is the gateway to development, which is faulty, because taxation merely helps the government meet its commitments to society, for instance, in providing public services such as education and health.
But the TRA and its ministerial experts at Treasury have failed to wake up to the reality that development arises from initiatives from each and every individual to save and initiate something, and hopefully employ someone else, and all of them earn their living from that activity.
In that case taxation has to facilitate individual initiative, not to compete with it and suffocate it, as if taxation was really the anchor of improved life conditions socially.
That is why growth models focus on low taxation, while socialistic and distributive ethics of all hues seek to tax to their best, and in due course reduce the population to labourers of the government, as was the case in Stalinist Russia, Maoist China and at present, the Kim gulag in North Korea.
Tanzania did nt go through the same experience but plenty of hardships were experienced by the population as the first phase government throttled marketing cooperatives for state entities, sought to control grain supply and ended up with shameful shortages in all areas.
After trade wasliberalized, socialism shifted to controlling the commanding heights of economy, and imposing punitive taxation on the private sector.
The commissioner general isn't capable of gauging what is happening in ordinary levels of society – it is unlikely, as it requires attachment to poor families and watching how their fortunes in life have shifted with the two decades of Mr Kitilya and his colleagues at TRA have ruled supreme over their lives.
Lately, the president told a May Day rally that taxation on wages and salaries would be reduced – the mainstay of TRA collections, where an individual paying Tsh35,000 in monthly taxes suddenly started paying Tsh100,000 when the TRA was set up in 1996.
Individual incomes started climbing down; while traders and others could at least reset their prices -- unlike employees -- but even their goods now sell less due to taxation.
With the rise of the East African Community, clearing barriers to free trade is taking time due to the need for effective taxation to TRA levels, thus insisting on keeping the surcharge on Zanzibar, despite the fact that Zanzibar is part of EAC and would have identical import tariffs.
This much wasn't quite elucidated at least in the press reports, but it shows this huge weakness of failing to accept the level of taxation that Zanzibar feels necessary, an extra cost arising from transportation, which Mainland traders would not have.
That level of advantage is supposed to be adequate, but local traders have constantly complained of the ‘Zanzibar route' because they want to set monopoly prices (as just a few traders sell one or two types of goods, e.g. khangas) and top TRA officials are eager to cooperate in their schemes.
Only in this manner can Tanzania grow up as an economy, capable of competition, igniting lower prices.
SOURCE: THE GUARDIAN
The basic explanation the commissioner general gave was that taxation on imports was low in Zanzibar, which is there was an additional charge imposed on goods entering from Zanzibar on account of the low taxes there.
It is arithmetically correct but it also illustrates why Tanzania is a negative, bad place to do business, and evidence why taxation is a ‘no growth' panacea.
The motto of the revenue authority as well as the government generally is that taxation is the gateway to development, which is faulty, because taxation merely helps the government meet its commitments to society, for instance, in providing public services such as education and health.
But the TRA and its ministerial experts at Treasury have failed to wake up to the reality that development arises from initiatives from each and every individual to save and initiate something, and hopefully employ someone else, and all of them earn their living from that activity.
In that case taxation has to facilitate individual initiative, not to compete with it and suffocate it, as if taxation was really the anchor of improved life conditions socially.
That is why growth models focus on low taxation, while socialistic and distributive ethics of all hues seek to tax to their best, and in due course reduce the population to labourers of the government, as was the case in Stalinist Russia, Maoist China and at present, the Kim gulag in North Korea.
Tanzania did nt go through the same experience but plenty of hardships were experienced by the population as the first phase government throttled marketing cooperatives for state entities, sought to control grain supply and ended up with shameful shortages in all areas.
After trade wasliberalized, socialism shifted to controlling the commanding heights of economy, and imposing punitive taxation on the private sector.
The commissioner general isn't capable of gauging what is happening in ordinary levels of society – it is unlikely, as it requires attachment to poor families and watching how their fortunes in life have shifted with the two decades of Mr Kitilya and his colleagues at TRA have ruled supreme over their lives.
Lately, the president told a May Day rally that taxation on wages and salaries would be reduced – the mainstay of TRA collections, where an individual paying Tsh35,000 in monthly taxes suddenly started paying Tsh100,000 when the TRA was set up in 1996.
Individual incomes started climbing down; while traders and others could at least reset their prices -- unlike employees -- but even their goods now sell less due to taxation.
With the rise of the East African Community, clearing barriers to free trade is taking time due to the need for effective taxation to TRA levels, thus insisting on keeping the surcharge on Zanzibar, despite the fact that Zanzibar is part of EAC and would have identical import tariffs.
This much wasn't quite elucidated at least in the press reports, but it shows this huge weakness of failing to accept the level of taxation that Zanzibar feels necessary, an extra cost arising from transportation, which Mainland traders would not have.
That level of advantage is supposed to be adequate, but local traders have constantly complained of the ‘Zanzibar route' because they want to set monopoly prices (as just a few traders sell one or two types of goods, e.g. khangas) and top TRA officials are eager to cooperate in their schemes.
Only in this manner can Tanzania grow up as an economy, capable of competition, igniting lower prices.
SOURCE: THE GUARDIAN