"1996–2024: Tanzania’s Tax Revenue Surge Reflects Decades of Economic Growth and Improved Compliance" Over the past 27 years, Tanzania’s tax revenue has experienced significant growth, reflecting economic expansion and improvements in tax administration. From 1996/97 to 2023/24, revenue from key taxes such as Pay As You Earn (PAYE) increased by 8,558%, rising from 38.4 billion […]
"1996–2024: Tanzania’s Tax Revenue Surge Reflects Decades of Economic Growth and Improved Compliance"
Over the past 27 years, Tanzania’s tax revenue has experienced significant growth, reflecting economic expansion and improvements in tax administration. From 1996/97 to 2023/24, revenue from key taxes such as Pay As You Earn (PAYE) increased by 8,558%, rising from 38.4 billion TShs to 3,320.6 billion TShs. Corporation Tax surged 6,433%, reaching 3,574.3 billion TShs. Value-Added Tax (VAT) on domestic goods and imports also saw notable rises, up by 5,635% and 6,726%, respectively, fueled by higher consumption and better compliance. These trends underscore Tanzania's progress in expanding its tax base and enhancing collection efficiency across sectors.
The tax revenue data over the years shows several key insights into Tanzania's economic trajectory and tax system efficiency. These figures reveal for each major category, showing how tax revenue trends reflect economic and policy developments:
1. P.A.Y.E. (Pay As You Earn)
1996/97: 38,357.8 million TShs
2023/24: 3,320,646.9 million TShs
Growth: ~8,558% over 27 years, with an average annual increase of 20%.
Insight: The high growth in PAYE indicates increased formal employment and income levels, likely due to economic expansion and higher workforce participation. The tax base grew as more people entered the formal economy, and incomes rose, raising PAYE collections dramatically. This can be attributed to expanding sectors like finance, telecommunications, and public sector employment.
2. Corporation Tax
1996/97: 54,689.7 million TShs
2023/24: 3,574,291.1 million TShs
Growth: ~6,433%, with an average annual increase of 18%.
Insight: Corporation tax growth shows a maturing business environment and expanding corporate sector profits. This is likely due to favorable economic policies and increased private investment, especially in industries such as mining, manufacturing, and financial services. The data also indicates fluctuations, with major jumps in revenue during certain years (e.g., 2015/16, 2021/22), which could reflect economic booms, reforms, or one-time revenue collections.
3. Individual Income Tax
1996/97: 9,117.9 million TShs
2023/24: 284,795.6 million TShs
Growth: ~3,023%, averaging 16% per year.
Insight: Increased tax revenue from individuals suggests a growing number of self-employed professionals and possibly enhanced tax compliance efforts. As Tanzania’s informal economy starts transitioning into formal setups, more individuals are paying taxes directly. This growth mirrors efforts to formalize various occupations and improve income reporting.
4. Other Income Taxes
1996/97: 23,442.3 million TShs
2023/24: 2,337,045.5 million TShs
Growth: ~9,870%, with an average annual growth rate of 19%.
Insight: The increase in "Other Income Taxes" points to a broader tax net, capturing income from investments, dividends, and non-salary sources. It reflects an effort by the Tanzania Revenue Authority (TRA) to diversify revenue sources beyond traditional income streams, possibly including capital gains, interest income, and rental income.
5. Domestic Excise Duty
1996/97: 61,923.3 million TShs
2023/24: 1,974,229.0 million TShs
Growth: ~3,088%, with an average annual increase of 15%.
Insight: Excise duty growth highlights an increase in consumption of excisable goods such as alcohol, tobacco, and fuel. The steady rise reflects both population growth and higher demand for such goods as living standards rise. Increased excise rates on high-demand goods could also contribute to the revenue increases seen in recent years.
6. Domestic VAT
1996/97: 67,053.2 million TShs
2023/24: 3,845,345.9 million TShs
Growth: ~5,635%, with an average annual growth rate of 20%.
Insight: This large increase in VAT collections reflects higher consumption and enhanced enforcement. As Tanzania's economy grew, so did the production and purchase of VAT-liable goods and services. Growth in retail, hospitality, and manufacturing contributed significantly. TRA’s improvements in tax administration and use of digital systems for VAT compliance also helped capture more revenue.
7. Import Duty
1996/97: 77,910.5 million TShs
2023/24: 1,845,087.5 million TShs
Growth: ~2,268%, with an average annual increase of 13%.
Insight: The rising import duty revenue indicates increased import volumes, particularly of consumer goods, machinery, and raw materials for industries. Tanzania’s reliance on imports for development projects, consumer demand, and industrialization contributed to this steady increase.
8. Excise Duty on Imports
1996/97: 29,760.1 million TShs
2023/24: 1,533,699.0 million TShs
Growth: ~5,053%, averaging 17% per year.
Insight: The significant increase in import excise duties suggests both an increase in high-demand, excise-liable imports and higher excise rates on these items. It reflects Tanzania's consumption pattern shift toward imported luxury items and vehicles, among others.
9. VAT on Import
1996/97: 54,909.4 million TShs
2023/24: 3,748,862.6 million TShs
Growth: ~6,726%, with an average annual growth rate of 18%.
Insight: VAT on imports grew strongly due to increasing import values and effective tax collection at entry points. Enhanced controls at borders and automation within TRA allowed for higher compliance and capture of VAT revenue.
Overall Interpretation
Economic Growth: The rapid growth across tax categories signifies expanding economic activities, higher income levels, and greater consumption, all leading to a broader tax base.
Improved Compliance: Higher revenue figures in later years suggest TRA’s improvements in tax compliance, including stricter enforcement, digitization of tax processes, and taxpayer education.
Diversified Revenue Base: The increase across various tax types indicates Tanzania's successful efforts to diversify its tax base, reducing reliance on any single revenue stream and making the tax system more resilient to economic shocks.
The substantial growth across all tax categories, with PAYE, Corporation Tax, and VAT revenues leading the increase from 1996/97 to 2023/24:
Tax Item
1996/97 (Million TShs)
2023/24 (Million TShs)
Total Growth (%)
Average Annual Growth Rate (%)
P.A.Y.E.
38,357.8
3,320,646.9
8,558%
20%
Corporation Tax
54,689.7
3,574,291.1
6,433%
18%
Individual Income Tax
9,117.9
284,795.6
3,023%
16%
Other Income Taxes
23,442.3
2,337,045.5
9,870%
19%
Domestic Excise Duty
61,923.3
1,974,229.0
3,088%
15%
Domestic VAT
67,053.2
3,845,345.9
5,635%
20%
Import Duty
77,910.5
1,845,087.5
2,268%
13%
Excise Duty on Imports
29,760.1
1,533,699.0
5,053%
17%
VAT on Imports
54,909.4
3,748,862.6
6,726%
18%
The tax revenue over the years shows several key insights into Tanzania's economic trajectory and tax system efficiency
1. P.A.Y.E. (Pay As You Earn)
1996/97: 38,357.8 million TShs
2023/24: 3,320,646.9 million TShs
Growth: ~8,558% over 27 years, with an average annual increase of 20%.
Insight: The high growth in PAYE indicates increased formal employment and income levels, likely due to economic expansion and higher workforce participation. The tax base grew as more people entered the formal economy, and incomes rose, raising PAYE collections dramatically. This can be attributed to expanding sectors like finance, telecommunications, and public sector employment.
2. Corporation Tax
1996/97: 54,689.7 million TShs
2023/24: 3,574,291.1 million TShs
Growth: ~6,433%, with an average annual increase of 18%.
Insight: Corporation tax growth shows a maturing business environment and expanding corporate sector profits. This is likely due to favorable economic policies and increased private investment, especially in industries such as mining, manufacturing, and financial services. The data also indicates fluctuations, with major jumps in revenue during certain years (e.g., 2015/16, 2021/22), which could reflect economic booms, reforms, or one-time revenue collections.
3. Individual Income Tax
1996/97: 9,117.9 million TShs
2023/24: 284,795.6 million TShs
Growth: ~3,023%, averaging 16% per year.
Insight: Increased tax revenue from individuals suggests a growing number of self-employed professionals and possibly enhanced tax compliance efforts. As Tanzania’s informal economy starts transitioning into formal setups, more individuals are paying taxes directly. This growth mirrors efforts to formalize various occupations and improve income reporting.
4. Other Income Taxes
1996/97: 23,442.3 million TShs
2023/24: 2,337,045.5 million TShs
Growth: ~9,870%, with an average annual growth rate of 19%.
Insight: The increase in "Other Income Taxes" points to a broader tax net, capturing income from investments, dividends, and non-salary sources. It reflects an effort by the Tanzania Revenue Authority (TRA) to diversify revenue sources beyond traditional income streams, possibly including capital gains, interest income, and rental income.
5. Domestic Excise Duty
1996/97: 61,923.3 million TShs
2023/24: 1,974,229.0 million TShs
Growth: ~3,088%, with an average annual increase of 15%.
Insight: Excise duty growth highlights an increase in consumption of excisable goods such as alcohol, tobacco, and fuel. The steady rise reflects both population growth and higher demand for such goods as living standards rise. Increased excise rates on high-demand goods could also contribute to the revenue increases seen in recent years.
6. Domestic VAT
1996/97: 67,053.2 million TShs
2023/24: 3,845,345.9 million TShs
Growth: ~5,635%, with an average annual growth rate of 20%.
Insight: This large increase in VAT collections reflects higher consumption and enhanced enforcement. As Tanzania's economy grew, so did the production and purchase of VAT-liable goods and services. Growth in retail, hospitality, and manufacturing contributed significantly. TRA’s improvements in tax administration and use of digital systems for VAT compliance also helped capture more revenue.
7. Import Duty
1996/97: 77,910.5 million TShs
2023/24: 1,845,087.5 million TShs
Growth: ~2,268%, with an average annual increase of 13%.
Insight: The rising import duty revenue indicates increased import volumes, particularly of consumer goods, machinery, and raw materials for industries. Tanzania’s reliance on imports for development projects, consumer demand, and industrialization contributed to this steady increase.
8. Excise Duty on Imports
1996/97: 29,760.1 million TShs
2023/24: 1,533,699.0 million TShs
Growth: ~5,053%, averaging 17% per year.
Insight: The significant increase in import excise duties suggests both an increase in high-demand, excise-liable imports and higher excise rates on these items. It reflects Tanzania's consumption pattern shift toward imported luxury items and vehicles, among others.
9. VAT on Import
1996/97: 54,909.4 million TShs
2023/24: 3,748,862.6 million TShs
Growth: ~6,726%, with an average annual growth rate of 18%.
Insight: VAT on imports grew strongly due to increasing import values and effective tax collection at entry points. Enhanced controls at borders and automation within TRA allowed for higher compliance and capture of VAT revenue.
Overall Interpretation
Economic Growth: The rapid growth across tax categories signifies expanding economic activities, higher income levels, and greater consumption, all leading to a broader tax base.
Improved Compliance: Higher revenue figures in later years suggest TRA’s improvements in tax compliance, including stricter enforcement, digitization of tax processes, and taxpayer education.
Diversified Revenue Base: The increase across various tax types indicates Tanzania's successful efforts to diversify its tax base, reducing reliance on any single revenue stream and making the tax system more resilient to economic shocks.
