The Bank of Tanzania’s August 2025 review highlights a strong fiscal outcome for June 2025, with total government revenues reaching TZS 3,753.4 billion, about 5.1% above target, driven by robust tax collections of TZS 3,108.7 billion (82.8% of total). Expenditures were contained at TZS 3,350.0 billion, with recurrent spending accounting for 72.9% and development spending 27.1%. This resulted in a budget surplus of TZS 403.4 billion, reflecting strengthened tax administration, cautious spending, and improved fiscal stability, thereby easing borrowing needs and supporting macroeconomic confidence.

1. Central Government Revenues (June 2025)

• Total collections: TZS 3,753.4 billion, which was 5.1% above the monthly target.
• Breakdown:
  • Central Government: TZS 3,579.2 billion (95.4% of total).
  • Tax revenue: TZS 3,108.7 billion, 7.8% above target – showing the impact of stronger tax administration.
  • Non-tax revenue: TZS 470.5 billion, short of the target (TZS 561.5 billion).

Tax revenues continue to be the dominant source, accounting for over 80% of government revenues.

2. Central Government Expenditures (June 2025)

• Total expenditure: TZS 3,350.0 billion, broadly aligned with available resources.
• Breakdown:
  • Recurrent expenditure: TZS 2,440.6 billion
  • Development expenditure: TZS 909.4 billion

Development expenditure accounted for about 27.1% of total spending, while recurrent expenditure (wages, interest, and other recurrent costs) made up 72.9%.

3. Fiscal Balance Context

• Revenues (TZS 3,753.4 billion) exceeded expenditures (TZS 3,350.0 billion) by about TZS 403.4 billion, implying a budget surplus in June 2025.
• The surplus mainly came from stronger tax performance, while expenditure remained aligned with available resources.

Table 1: Central Government Revenues (June 2025)

Table 2: Central Government Expenditures (June 2025)

Economic Implications of Central Government Finances – June 2025

1. Central Government Revenues (June 2025)

• Performance and Breakdown: Total collections of TZS 3,753.4 billion surpassed the monthly target by 5.1%, with central government revenue at TZS 3,579.2 billion (95.4%). Tax revenue hit TZS 3,108.7 billion (82.8% of total), exceeding its target by 7.8%, while non-tax revenue lagged at TZS 470.5 billion (12.6%), falling short of the TZS 561.5 billion target.
• Economic Meaning: The strong tax performance, driven by improved administration (e.g., VAT and income tax enforcement), enhances fiscal capacity, reducing reliance on external borrowing (external debt at USD 32,955.5 million). This supports infrastructure and development spending (TZS 909.4 billion), aligning with GDP growth goals. The underperformance in non-tax revenue (e.g., fees, dividends) suggests administrative delays or inefficiencies, potentially limiting supplementary funding. Over 80% tax reliance mirrors regional trends (e.g., EAC peers), but diversification could mitigate risks from economic shocks.

2. Central Government Expenditures (June 2025)

• Allocation and Balance: Total expenditure was TZS 3,350.0 billion, with recurrent expenditure at TZS 2,440.6 billion (72.9%) and development expenditure at TZS 909.4 billion (27.1%).
• Economic Significance: The high recurrent share (wages, interest, operations) ensures public sector stability and debt servicing (national debt at USD 46,586.6 million), but limits capital investment. Development spending (27.1%) supports growth in agriculture (e.g., food stocks at 485,930.4 tonnes) and infrastructure, though its share below one-third indicates a cautious approach. Alignment with available resources (revenue-driven) prevents deficit financing pressures, complementing the surplus and easing domestic borrowing needs (e.g., Treasury bill yields at 8.13%).

3. Fiscal Balance Context

• Surplus Achievement: Revenues exceeded expenditures by TZS 403.4 billion, yielding a surplus driven by tax overperformance and controlled spending.
• Economic Implications: This surplus strengthens fiscal buffers, reducing reliance on domestic securities (e.g., TZS 158.9 billion in Treasury bills accepted) and supporting the shilling's stability (TZS 2,666.79/USD). It allows debt reduction or reinvestment, enhancing credit ratings and attracting foreign inflows (e.g., tourism receipts at USD 3,871.9 million). In a global context of easing commodity prices (oil at USD 69.2/barrel), this positions Tanzania to weather external uncertainties, though sustained surpluses depend on addressing non-tax revenue gaps.

Summary of Broader Economic Significance

• Fiscal Strength and Stability: The surplus and robust tax collection signal effective fiscal management, supporting monetary easing (CBR 5.75%) and credit growth (15.9% annually). This fosters investor confidence and aligns with Tanzania's 6% growth trajectory.
• Balanced Growth: While recurrent spending ensures stability, the lower development share may constrain long-term productivity gains, requiring policy focus on capital projects.
• Comparative Context: Compared to 2024's fiscal deficits (e.g., 2.5% of GDP), the 2025 surplus reflects recovery, outperforming some EAC peers facing revenue shortfalls amid global trade tensions.
• Challenges Ahead: Non-tax revenue underperformance and high recurrent spending (72.9%) need attention to sustain surpluses and fund development, especially with external debt at USD 32,955.5 million.

Between 1996/97 and 2021/22, revenue collections by the Tanzania Revenue Authority (TRA) in Zanzibar have shown significant growth, rising from TShs 16,671.4 million to TShs 356,042.2 million. This equates to a total growth of 2,035% over 25 years, reflecting an average annual growth rate of approximately 13.2%. This strong overall trend highlights long-term improvement in revenue collection and economic activities in Zanzibar, despite fluctuations across different periods.

Period-by-Period Analysis

• Early Period (1996-2000):
  During this initial phase, Zanzibar’s revenue collections grew impressively, from TShs 16,671.4 million to TShs 39,098.8 million, marking a 134.5% increase over four years. The average annual growth rate was about 23.8%, driven by foundational efforts to enhance revenue systems and expand economic activities.
• Decline and Stabilization (2000-2005):
  From 2000, revenue collections experienced a sharp downturn, falling from TShs 39,098.8 million to TShs 20,734.9 million by 2005. This 47% decrease represented the most severe dip in the dataset, potentially caused by economic challenges or inefficiencies in collection methods. The period was marked by an average growth rate of -0.9% annually, indicating stagnation and stabilization attempts.
• Recovery and Growth (2006-2015):
  Following the downturn, recovery took place from 2006, with collections rising from TShs 22,374.6 million in 2005/06 to TShs 143,936.4 million in 2014/15. This impressive 543% growth showed resilience, as the average annual growth rate reached around 23%. Improved administration and economic activities likely supported this phase of robust growth.
• Recent Period (2015-2021):
  From 2015/16, revenue collections grew from TShs 170,967.6 million to TShs 298,157.7 million in 2020/21, indicating a 74.4% rise with an average annual growth rate of around 11.8%. Although growth was slower than in earlier periods, this phase still demonstrated consistent improvement, which contributed to long-term revenue expansion.

Notable Year-over-Year Changes

The analysis highlights key years of growth and decline:

• The largest single-year increase occurred in 2017/18, with a 25.6% growth rate.
• The most significant annual decline was in 2000/01, where collections fell by 40.2%.
• The most recent growth from 2020/21 to 2021/22 saw a strong 19.4% increase, indicating recovery and resilience in Zanzibar’s revenue collection efforts.

Share of Total TRA Collections

Despite Zanzibar’s overall revenue growth, its share of total TRA collections has declined:

• 1996/97: Zanzibar accounted for 3.2% of the total collections.
• 2020/21: This share decreased to 1.7%.
• 2021/22: The share further dropped to 1.6%.

This trend suggests that although collections in Zanzibar have increased, growth in mainland Tanzania has outpaced that in Zanzibar, reducing Zanzibar’s relative contribution to the total collections.

Growth Phases

• Slowest Growth Phase (2000-2005): The period marked a challenging time with an average annual growth rate of -0.9%, a result of economic setbacks and collection difficulties.
• Fastest Growth Phase (2015-2018): Revenue collections grew rapidly in these years, averaging 22.3% annually, driven by reforms and enhanced economic activities.
• Most Stable Growth Phase (2010-2015): This period was marked by steady growth, with consistent annual increases of 13-15%, showing a balance between collection efficiency and economic activity.

Recent Performance (Last 5 Years)

• 2017/18: Achieved high growth of 25.6%.
• 2018/19: Maintained positive growth at 13.1%.
• 2019/20: Experienced a slight decline of -3.5%, likely due to economic or external factors.
• 2020/21: Growth rebounded at 6.7%.
• 2021/22: Strong recovery with a 19.4% increase.

Summary

Over the years, TRA Zanzibar has shown an upward trend in revenue collections, albeit with fluctuations. Despite a reduction in its share of the total TRA collections, Zanzibar has maintained growth, particularly through strong phases of recovery and steady improvement in recent years. The findings indicate that while TRA Zanzibar faces challenges, the region’s economic activities and revenue collection efficiency have improved significantly over time.

The revenue collection trends for TRA Zanzibar with key insights into Zanzibar's economic environment, fiscal policy effectiveness, and overall revenue collection dynamics over the last 25 years:

1. Long-Term Growth with Fluctuations

• The substantial 2,035% growth over 25 years suggests an overall positive trajectory in Zanzibar’s economic activities and revenue collection efficiency.
• Despite this, the fluctuations—periods of decline, recovery, and stabilization—show that Zanzibar’s revenue base is susceptible to both internal and external factors, which can significantly impact growth rates.

2. Early Growth and Subsequent Stabilization

• The high growth rate in the early years (1996-2000) likely indicates foundational economic growth and perhaps initial stages of improved tax administration.
• However, the severe decline from 2000-2005 suggests vulnerabilities, potentially tied to administrative challenges, economic contractions, or changes in tax policy or compliance.

3. Improvement in Revenue Collection Efficiency

• The significant recovery and growth from 2006 onward highlight improvements in revenue collection practices, likely influenced by better tax administration, policy reforms, and economic development efforts in Zanzibar.
• Steady growth phases, especially the stable 2010-2015 period, suggest that the TRA developed more consistent and effective revenue collection mechanisms.

4. Lower Share in Total TRA Collections

• Zanzibar’s declining share of total TRA collections—dropping from 3.2% in 1996 to 1.6% in 2021—indicates that mainland Tanzania has grown faster in revenue collection. This could reflect a larger economic expansion on the mainland compared to Zanzibar, emphasizing the need for Zanzibar to diversify and strengthen its revenue base.

5. Resilience in Recent Years

• The recovery and growth in recent years, including a 19.4% increase in 2021/22, reflect resilience and adaptability, possibly supported by more robust administrative frameworks and economic activity post-pandemic.
• Continued positive year-over-year performance, despite some setbacks, suggests that TRA Zanzibar can maintain growth if current trends in policy and administrative efficiency continue.

6. External and Economic Sensitivity

• The periodic declines highlight Zanzibar’s sensitivity to economic and possibly political factors that can affect tax collection.
• With noticeable declines like those in 2000-2005 and smaller dips in specific years, there is a clear indication that Zanzibar’s revenue performance could benefit from a focus on economic diversification and stability.

Overall Implication

The research suggests that while Zanzibar has demonstrated long-term growth in revenue collection, it needs to address its reliance on relatively narrow economic drivers and further improve revenue administration to minimize fluctuations. Additionally, fostering consistent economic growth, reducing dependency on specific sectors, and expanding the tax base could help maintain or increase Zanzibar’s share of total TRA collections.

Tanzania has experienced significant progress in its income tax collections, with an overall growth of 9,400% from TZS 14.9 billion in 2000 to TZS 1.41 trillion in 2024. Early efforts to broaden the tax base and enhance administration led to rapid expansion in the early 2000s, followed by a period of volatility. However, from 2011 to 2024, steady improvements in tax efficiency, a broader tax base, and stronger collection systems resulted in consistent and substantial year-over-year growth, with the most recent period achieving record-breaking levels of income tax revenue.

Early Growth Phase (2000-2005):

• Initial Collection: TZS 14.9 billion (2000)
• Final Collection: TZS 308 billion (2005)
• Total Growth: 1,974% over the period
• Average Annual Growth: 112.8%
• Key Insight: This period marked a significant expansion in the tax base. The government focused on improving tax collection systems, which resulted in a rapid increase in income tax revenues. The growth rate was extraordinary, highlighting the government's efforts to enhance fiscal revenue generation.

Volatility Period (2006-2010):

• Highest Collection: TZS 308.3 billion (2006)
• Lowest Collection: TZS 84.5 billion (2008)
• Average Collection: TZS 184.2 billion
• Key Insight: During this phase, there was substantial volatility in income tax collections. The tax system faced challenges, including fluctuations in revenue, with some years showing strong growth while others faced declines. The global financial crisis of 2008 likely contributed to the dip in 2008. This period reflected mixed outcomes, which were a result of external economic shocks and domestic administrative inefficiencies.

Stabilization Phase (2011-2015):

• Average Annual Collection: TZS 208.4 billion
• Average Annual Growth: 27.5%
• Key Insight: The years 2011-2015 saw more predictable and consistent growth patterns. The government focused on improving tax administration and reducing inefficiencies. This led to more stable and sustainable growth, with a steady increase in collections, reflecting better tax enforcement, compliance, and economic expansion.

Strong Growth Period (2016-2020):

• Starting Collection: TZS 300.4 billion (2016)
• Ending Collection: TZS 758.7 billion (2020)
• Total Growth: 152.6%
• Average Annual Growth: 20.4%
• Key Insight: This phase represents a period of sustained strong growth in income tax collections. The government’s efforts to broaden the tax base and improve collection efficiency paid off, with tax revenues more than doubling over five years. The period also reflects the country’s growing economy, which contributed to a higher income tax base.

Recent Period (2021-2024):

• Record Collection: TZS 1.41 trillion (2024)
• Average Annual Growth: 18.7%
• Key Insight: The most recent period marks a significant milestone, with Tanzania achieving record levels of income tax collection, crossing the TZS 1 trillion mark for the first time in 2022 and continuing strong growth in subsequent years. This sustained growth indicates not only improved tax collection systems but also the country’s expanding economy, broader tax base, and increased compliance efforts.

Key Statistics and Trends:

1. Overall Growth:
   • 2000: TZS 14.9 billion
   • 2024: TZS 1.41 trillion
   • Total Growth: 9,400%
   • CAGR (Compound Annual Growth Rate): 19.8%
2. Period Averages:
   • 2000-2005: TZS 118.2 billion
   • 2006-2010: TZS 184.2 billion
   • 2011-2015: TZS 208.4 billion
   • 2016-2020: TZS 526.3 billion
   • 2021-2024: TZS 1.08 trillion
3. Notable Milestones:
   • First time exceeding TZS 300 billion: 2005
   • First time exceeding TZS 500 billion: 2018
   • First time exceeding TZS 1 trillion: 2022
4. Growth Characteristics:
   • Highest Annual Growth: 345.3% (2003)
   • Most Stable Period: 2016-2024
   • Most Volatile Period: 2006-2010
   • Average Annual Growth (entire period): 19.8%
5. Recent Trends (2020-2024):
   • Continued strong, consistent growth with lower volatility.
   • Enhanced collection efficiency and a broader tax base have resulted in steady year-over-year increases in income tax revenues.

Tanzania's income tax collection has shown impressive growth, from a modest TZS 14.9 billion in 2000 to a record TZS 1.41 trillion in 2024, representing a 9,400% increase. The evolution of these collections reflects the country's ongoing efforts to improve tax administration, expand the tax base, and enhance compliance. Although there were periods of volatility, the most recent years have seen significant stability and robust growth, driven by effective policies and a growing economy. This upward trajectory suggests that Tanzania is positioning itself for continued fiscal health through improved revenue collection systems.

Tanzania's income tax collection trends from 2000 to 2024 tells the story of significant growth and improvements in the country’s tax system.

1. Early Growth: In the early years (2000-2005), there was a rapid expansion in income tax collections, driven by efforts to broaden the tax base and improve tax administration. The 1,974% growth in this period indicates that the government made significant strides in developing a more effective tax system.
2. Volatility Period (2006-2010): This phase was marked by volatility, with major fluctuations in income tax collections. A sharp decline in 2008 (due to the global financial crisis) reflects the vulnerability of the tax system to external shocks. This period also saw efforts to stabilize the collection process, which weren’t fully realized until later.
3. Stabilization and Growth (2011-2015): The period between 2011 and 2015 shows a transition to more stable and predictable tax revenue collection. The 27.5% average annual growth was steady, as tax administration and enforcement became more consistent, contributing to a stronger fiscal foundation.
4. Strong Growth (2016-2020): From 2016 to 2020, income tax collections saw strong, sustained growth of 152.6%. The government improved collection efficiency, and the economy continued to expand. This period represents the government’s success in enhancing the tax base and fiscal capacity.
5. Record Collections (2021-2024): In the most recent period, Tanzania achieved its highest-ever income tax collections, reaching TZS 1.41 trillion in 2024. This growth reflects a well-established and more stable tax system, with higher efficiency and a broader tax base. The country’s ability to exceed the TZS 1 trillion mark signals a robust economy and strong public sector revenue generation capabilities.

Overall Analysis:

Tanzania's tax revenue collection has evolved from small beginnings to record-breaking collections, growing by 9,400% from 2000 to 2024. The most recent years show consistent growth, suggesting that the country’s tax administration has matured, and its economy is more resilient to external shocks. The trends indicate that the government's policies to improve tax compliance and broaden the tax base are succeeding, and Tanzania is moving toward greater fiscal sustainability and stability.