Revenue collections for the fiscal year 2023/24

In the fiscal year 2023/24, Tanzania's Local Government Authorities (LGAs) achieved a remarkable revenue collection of TZS 1,132.1 billion, reaching 94.8% of their target. This performance reflects significant economic activity across different zones, with Dar es Salaam leading with TZS 277.3 billion, accounting for 24.5% of the total revenue. The Lake Zone followed closely, contributing TZS 237.0 billion (20.9%), driven by its robust agricultural and trading sectors. Meanwhile, the Southern Highlands, Northern, and South Eastern Zones collected TZS 182.3 billion (16.1%), TZS 166.9 billion (14.7%), and TZS 165.9 billion (14.7%) respectively, underscoring their reliance on agricultural activities. The Central Zone, however, lagged with only TZS 103.0 billion (9.1%), suggesting a need for economic diversification. The successful implementation of Point-of-Sale (POS) devices and online auctioning through the Tanzania Mercantile Exchange has notably enhanced revenue collection efficiency, pointing to the importance of modern collection strategies and public compliance initiatives in bolstering local government revenues.

1. Total Revenue Collection: The LGAs collected a total of TZS 1,132.1 billion, achieving 94.8% of the target for the year.
2. Zone-Wise Breakdown:
   • Dar es Salaam Zone:
     • Collection: TZS 277.3 billion
     • Share of Total LGA Revenue: 24.5%
     • Dar es Salaam contributed the largest share, highlighting its role as a key economic hub.
   • Lake Zone:
     • Collection: TZS 237.0 billion
     • Share of Total LGA Revenue: 20.9%
     • Significant revenue from the Lake Zone reflects its strong economic activities, including agriculture and trade.
   • Southern Highlands Zone:
     • Collection: TZS 182.3 billion
     • Share of Total LGA Revenue: 16.1%
     • This region’s contribution is supported by agricultural activities and improved collection systems.
   • Northern Zone:
     • Collection: TZS 166.9 billion
     • Share of Total LGA Revenue: 14.7%
     • The Northern Zone’s revenue was enhanced by tourism and agricultural trading.
   • South Eastern Zone:
     • Collection: TZS 165.9 billion
     • Share of Total LGA Revenue: 14.7%
     • Revenue in this zone benefited from the trade of food and cash crops and increased POS device usage.
   • Central Zone:
     • Collection: TZS 103.0 billion
     • Share of Total LGA Revenue: 9.1%
     • The Central Zone contributed the smallest share, possibly due to its smaller economic base relative to other zones.
3. Key Drivers:
   • The use of Point-of-Sale (POS) devices improved efficiency in tax collection.
   • Trading activities, especially in food and cash crops, were boosted by favorable harvests.
   • Online auctions of certain cash crops through the Tanzania Mercantile Exchange also contributed to the revenue increase.

The local government revenue for Tanzania’s fiscal year 2023/24 with key insights about regional economic dynamics and the impact of collection strategies:

1. Economic Disparity Across Zones:
   • Dar es Salaam's dominant contribution (24.5%) underscores its status as Tanzania’s economic hub. This suggests a concentration of commercial activities, services, and higher-value businesses within the city compared to other regions.
   • Regions like the Lake Zone and Southern Highlands also show strong economic activity, likely due to agriculture and trade, contributing significantly to the local government revenue base. However, other zones such as the Central Zone contribute less, possibly indicating limited economic diversity or smaller commercial bases.
2. Effectiveness of Enhanced Collection Systems:
   • The increased use of Point-of-Sale (POS) devices and online platforms for auctioning cash crops has enhanced revenue collection efficiency and compliance. This shows that investments in digital and streamlined collection systems can substantially improve tax performance, even in regions where traditional collection might be challenging.
3. Dependence on Agriculture and Trade:
   • Revenue collection in the Lake, Southern Highlands, and South Eastern zones highlights a reliance on agriculture as a critical source of income for local governments. This reliance suggests that agricultural productivity and favorable crop trading conditions have a direct impact on regional revenue outcomes.
4. Potential for Further Diversification:
   • The substantial revenue contributions from economically active zones like Dar es Salaam and the Lake Zone point to opportunities for other regions to develop their commercial sectors. If similar collection practices and economic incentives were introduced more broadly, other zones could see growth in their contributions.
5. Strategic Role of Public Awareness and Compliance:
   • The collection rates achieved (94.8% of the target) indicate that public awareness campaigns and government efforts to improve compliance are yielding positive results. Enhanced taxpayer education and streamlined processes appear to foster greater adherence to tax obligations, benefiting local revenue streams.

In the fiscal year 2023/24, Tanzania's tax revenue performance was notably strong, reaching TZS 27,138.4 billion, or 97.5% of the budgeted target, largely due to enhanced use of electronic fiscal devices (EFDs) and improved tax compliance stemming from ongoing public awareness campaigns. The Dar es Salaam Zone emerged as the dominant contributor, accounting for 89% of total tax revenue with TZS 24,145.7 billion, highlighting the region's significance as Tanzania's economic hub. In contrast, other zones such as the Northern Zone, Lake Zone, and Southern Highlands contributed significantly less, at 5.7%, 1.8%, and 1.4% respectively. Tax revenue sources showed that local goods and services generated TZS 11,988.5 billion (44.2% of total revenue), while taxes on imports made up TZS 10,518.5 billion (38.8%). Direct taxes represented a smaller share at TZS 4,631.3 billion (17.1%), indicating potential for growth in this area. This fiscal landscape underscores the need for Tanzania to diversify its revenue streams and address regional disparities to ensure sustainable economic growth.

Tax Revenue by Zone:

• Dar es Salaam Zone: Contributed the highest share, accounting for 89% of total tax revenue, with a collection of TZS 24,145.7 billion.
• Other Zones: The Lake Zone collected TZS 495.6 billion (1.8% of total), the Northern Zone TZS 1,550.8 billion (5.7%), and the Southern Highlands Zone TZS 385.0 billion (1.4%).

Tax Revenue by Category:

• Taxes on Local Goods and Services: Reached TZS 11,988.5 billion, representing 44.2% of the total revenue.
• Taxes on Imports: Totaled TZS 10,518.5 billion, making up 38.8% of revenue.
• Direct Tax: Accounted for TZS 4,631.3 billion, or 17.1% of total tax revenue.

Tanzania's tax revenue performance for the fiscal year 2023/24:

1. Overall Tax Performance: Tanzania's tax revenue closely aligned with government targets, reaching 97.5% of the budgeted target. This strong performance suggests that the government’s tax collection initiatives, such as the increased use of Electronic Fiscal Devices (EFDs) and efforts to improve tax compliance, have been effective. Public awareness efforts about tax obligations have likely played a role in encouraging compliance and maintaining steady revenue collection.
2. Regional Disparities in Tax Collection:
   • The Dar es Salaam Zone significantly outperformed other regions, contributing 89% of total tax revenue (TZS 24,145.7 billion). This dominance likely reflects Dar es Salaam’s economic activity, being Tanzania's primary commercial hub.
   • Other regions contributed significantly less: the Northern Zone (5.7%), the Lake Zone (1.8%), and the Southern Highlands Zone (1.4%). These numbers indicate a heavy reliance on Dar es Salaam for tax revenue and may highlight the economic disparity among regions.
3. Tax Revenue by Category:
   • Taxes on Local Goods and Services: Constituted the largest portion, 44.2% of total tax revenue (TZS 11,988.5 billion), indicating a strong domestic consumption base contributing to tax revenue.
   • Taxes on Imports: Accounted for 38.8% (TZS 10,518.5 billion), showing the importance of imports in Tanzania’s tax revenue structure. This dependency also suggests that international trade remains a significant revenue stream for the government.
   • Direct Tax: Made up 17.1% of total tax revenue (TZS 4,631.3 billion), which likely includes income and corporate taxes. This lower share compared to other categories may indicate room for improvement in direct tax collection, potentially through further initiatives to enhance individual and corporate tax compliance.

Implications: The data reflects the government’s reliance on a limited number of revenue sources and zones. The heavy dependency on Dar es Salaam and taxes from imports and consumption suggests that diversifying the tax base across regions and enhancing direct tax collections could strengthen future revenue resilience.