Quote unquote: the tax debate

“The fiscal regime should be looked at broadly, bearing in mind other benefits accruing from particular investments and/or in particular sectors…..these seem to be undertaken on a case by case basis rather than on the basis of policy that is predictable and relatively stable,” he said.

The ‘he’ in question was Juma Mwapachu, according to today’s Citizen, in what it describes as a “widely circulated electronic mail discussion”. Unfortunately, the words were part of my contribution to the discussion, not Ambassador Mwapachu’s. Needless to say, his contributions to the discussion were more insightful than mine could hope to be.

But expect to hear more of the substantive issue – the fiscal regime as it applies to large tax payers. Zitto Kabwe – CHADEMA MP and opposition Finance Spokesman – kicked off the debate on his blog, responding to Prime Minister Pinda’s presentation of a list of the country’s 15 largest tax payers. It has now spread to listserves, twitter and the press.

As Zitto pointed out, some familiar companies are missing. Framing the debate as one about heroes and villains and ranking taxpayers by amount paid will gain attention. But it may also obscure some important issues. How do we measure the contribution of companies to the economy? Jobs? Backward and forward linkages? Or just the amount of corporate tax paid?

And then there are the more difficult questions that have arisen in the debate. Are politically well connected companies treated more leniently? Large concerns anywhere will always have their share of directors appointed for their political connections. But in an environment where relationships so often trump regulations, the question will be asked with more feeling.

We may also want to question why tax exemptions in Tanzania are so much higher than in our neighbours, Uganda and Kenya. If these are are targeted towards the development of particular sectors, well and good. If they are based opaque lobbying case by case, then not so much. See a Twaweza report on the issue from last year here.

This one could run and run.


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