Why does the government of Tanzania work so hard to control unemployment? The answer is largely based on self-preservation. Unemployment negatively impacts the Bank of Tanzania ability to generate income and also tends to reduce economic activity. Currently Tanzania have large number of graduates that cause higher number of unemployment, When unemployment is high, actually fewer people are paying taxes to the government to help it run.

Additionally, unemployment results in fewer people with income to spend on goods and services. When less people have money to go out to eat, buy gifts, or shop at the local stores, this lowers spending. This in turn makes it more difficult for businesses to profit and expand, which can result in lower job growth and lower overall economic growth.

So how does the tax side of fiscal policy affect unemployment in Tanzania? Taxation is one of the primary fiscal policy tools the government of Tanzania has at its disposal to reduce unemployment. When unemployment is high or the economy needs a boost out of a recession, the government can lower the tax rates on businesses and individuals, ultimately putting more money into the hands of consumers.

In general, as consumers spend or demand more goods and services, businesses make more money and need to hire more people to keep up with increased demand. This in turn can result in more people paying taxes into the government and generating revenue.

For example, if you owned a local shop and residents now had more money to spend, they may come visit you more often to indulge in that special treat or experience you offer. When they demand more baked goods and coffee, you may need to hire an additional employee to keep up so that you can maximize your revenue. As this happens across several different businesses and local economies, it can have a largely positive effect on employment.