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Africa

Opinion: Tanzanians are finally paying taxes for the good of the country

It looks as if Tanzania's push to get its citizens and foreign investors to pay more taxes and reduce donor dependency is working, writes Anaclet Rwegayura.

Tanzania's Finance Minister, Philip Mpango, admits that he is committed to his job but hates one aspect – negotiating with donors for development aid. 

"There can be nothing more humiliating for a government representative to go cap in hand begging for assistance from donors," Mpango said on a recent visit to a Tanzania tax office in Dar es Salaam, Tanzania's largest city. 

The minister's message to people queued to pay property tax was clear. The Tanzanian government yearns to put an end to its donor dependency. Every year since independence 55 years ago, the country's budget has banked on donors. 

But purse holders always dictate some condition or other. Not only can donor dependency fail to bring the desired result, it can also bring unrelenting pressure and negotiations about debt rescheduling. That means even more frustration for ministers like Mpango. 

If a country like Tanzania wants to set and implement its own people-centered development agenda, then it can't continue to hang on someone else's purse strings. 

Boosting taxes is key to developing Tanzania 

One way to free itself of donors is for Tanzania to increase the funds it raises through taxation and the people must realize their role in bolstering domestic revenue. 

Photo shows man selling fruit in rain on the street while several woman walk past with buckets on their heads

Development is still desperately needed, with two thirds of Tanzanians living below the poverty line

To meet this challenge, the government of President John Pombe Magufuli has come up with some innovative approaches and reinforced traditional ways to ramp up revenue collection. 

Though not yet tested by time, these approaches seem to be working.

Never before have urban Tanzanians responded so massively to paying property tax as they have done this year. The government has even extended the grace period twice to the end of July 2017 so that everybody has a chance to pay their taxes. 

But why didn't they honor them in the past? 

Many said they were paying their taxes to avoid being taken to court and fined for tax avoidance. Others said they now trusted the government to spend the tax on public services whereas in the past, local governments misappropriated tax revenue. 

Eager to turn round Tanzania's economy and living standards, President Magufuli has warned district and regional officials to adhere to government financial regulations if they want to keep their jobs. 

His actions since his election in 2015 to develop for Tanzania's economy make me conclude that the old story of "What underdeveloped countries lost, the developed world gained" no longer holds true for Tanzania. 

Foreign investors also have to pay fair taxes

Magufuli's well-timed economic adjustment policies, for instance, are showing signs of reversing imbalances between the state and investors in the mining sector. 

Photos shows a man walking past a large rock painted with words:Active mining area. Do not enter

Tanzania has recently signed several new mining laws

His move to add a clearing fee on mining exports, increase royalties on metals and give the government power to renegotiate existing mining contracts had raised the eyebrows of many stakeholders. Some expressed fear that mineworkers would lose jobs if foreign investors decided to close down operations and pull out of Tanzania in protest. Others said the president's tactics were overheated. 

They had not realized Magufuli was acting on a carefully considered strategy. Foreign mining firms have announced one after another that they wouldn't hesitate to meet the new royalty rate of 6 percent imposed on metals under the newly passed Tanzanian natural resources legislation. 

Through industrialization and improved productivity in every sector, President Magufuli is pulling out all stops to see Tanzania achieve a middle-income status by 2025. Investors have no reason to worry as long as they do clean business and avoid doing back door deals. 

Portrait of Anaclet smiling

Anaclet Rwegayura in Dar es Salaam is a regular DW columnist

My advice to Finance Minister Mpango is that 'if you love what you do, nothing is hard'. 

His job is tough. But the popular support demonstrated by everyone from those paying property tax to shoppers demanding printed receipts for every shilling spent should give him, and his government, a sense of success.