Similar to many other developing economies in the world, Tanzania is also one of the countries that struggle when it comes to collecting taxes. Obviously, this is only the tip of an iceberg that goes very deep. The problem of citizens not paying their taxes is rooted in many other issues that span all over a political system.
So why are Tanzanians not paying their taxes exactly? Well, one of the main problems until recently was the fact that the country’s tax collection system was entirely paper-based. This system comes with dozens of problems attached to it, and most of them coming from the fact a paper-based system is bureaucratic. This alone can cause many citizens to outright give up on the entire process. Moreover, this system causes a lot of corruption and revenue leakages. So to put a stop to all of this, the Tanzanian government employed and ICT system.
What Is an ICT System?
ICT is short for Information and communications technology. This technology has seen a great increase of use in many developing economies, however, the implementation wasn’t always successful.
Tanzania can serve as the perfect example how technology doesn’t always help, as much as it could. In Tanzania, only 12% of the overall adult population pays for taxes, in spite of the new digital system the country employed with the help of Chinese fiscal company.
In 2018, Mussa Assad, the controller and auditor general presented his annual report of 2016/2017. The report discovered that the country has spent 25.3 trillion Tanzanian Shillings into ghost ventures. This is equal to $10.88 billion. Accordingly, there was a lack of documents from the Ministry of Finance, such as “the proper cash book for the consolidated funds and bank reconciliation statements that provide crucial underlying information for the figures under verification.”
The issue is obvious, Tanzania is not successful in its attempts to keep a record of its transactions. More importantly, public institutions, such as the Ministry of Finance, refuse to share the information with the public. This manner of behavior allows them to remain uncountable for all the mismatches in numbers. So, even though the new fiscal and tax collecting system in Tanzania should, by all means, be a successful one, it proved to be the opposite. Technology can help only where there’s a strong willingness from the political elite to face a problem.
Along with the new tax collecting system, Tanzania also developed LGRCIS.
The Local Government Revenue Collection Information System (LGRCIS)
The system was developed by the Government of Tanzania in collaboration with the World Bank and the Danish International Development Agency (DIDA). LGRCIS is basically a system that servers to help Tanzania collect taxes in municipal councils. Upon its development, the system managed revenue collection on all levels – property tax, billboard tax, service levy, hotel levy, and business licenses. LGRCIS uses help from GIS (Geographic Information Systems) to support tax collection.
Not only does the system make tax collection easier, it also helps identify the taxpayer much easier.
Overall, LGRCIS represents three systems in one:
- Human resources information system
- Document and file management system
- Revenue collection system
As such, it’s supposed to help Tanzania on all grounds and improve the urbanization of the country in the long run. Apparently, the system is helping, and with each year the tax collection revenue seems to be higher.
However, one thing remains, Tanzania, just like many other developing countries, needs to learn to appreciate transparence. Citizens will always deny paying for taxes if they feel like their money is not going to the right place. This leads to distrust in state institutions. Taxpayers have to know where their money goes, and if a country doesn’t provide information, it will always face problems.