In Summary

This is the situation in many countries – developed, developing and least developed – where broken tax systems have shifted the burden of taxation away from shareholders and onto workers.

A new report by the National Bureau of Statistics (NBS) is yet another reminder of the heavy tax burden that the Tanzanian worker carries. The 2016/17 Tax Statistics Report for Tanzania Mainland notes that managers, supervisors and junior employees are paying more taxes than their employers or shareholders of the companies they work for. Salaried workers have pay-as-you-earn and the various consumption taxes deducted from their incomes when they buy goods.

This is the situation in many countries – developed, developing and least developed – where broken tax systems have shifted the burden of taxation away from shareholders and onto workers. Finding the fairest and most practical way of rebalancing the tax system to ensure that all pay their fair share is the challenge that many governments across the globe are facing.

Tanzania is no exception. The need to continuously rebalance the tax system cannot be overemphasised. Experts blame this situation on cuts in corporation tax (tax levied on companies’ profits). According to the NBS report, corporation taxes, which reached their peak in 2013/14 when they accounted for 37 per cent of all direct taxes, have been shrunk in later years.

The government needs to continue working on plans and new measures to provide tax relief to workers.