Building up efficient and fair tax systems – lessons from Tanzania

This project analyses administrative tax data in Tanzania to provide knowledge for better policy-making with respect to mobilizing public revenue for inclusive economic development.

The project  conducts new, policy-relevant research based on the empirical analysis of administrative tax data in partnership with the Tanzania Revenue Authority (TRA) and Department of Economics of the University of Dar es Salaam (DoE-UDSM). The research outputs of the programme are intended to assist policy makers as they develop and implement policy tools to improve development prospects in their country. An important additional goal of the project is to develop institutional and individual capacity to use administrative data for ongoing economic research and policy calibration.

Potential research areas under the collaboration project includes taxing the informal sector, bottom-up approaches for estimating VAT gaps, and taxing of large enterprises. The administrative data to be used in the proposed research has been compiled at TRA.

This co-operation is a subcomponent of the UNU-WIDER project Building up efficient and fair taxation. In Tanzania the co-operation with DoE-UDSM covers also tax-benefit microsimulation work done under the SOUTHMOD project. Both projects are part of UNU-WIDER's programme on Domestic Revenue Mobilization (DRM). The DRM programme is financed by the Norwegian development co-operation agency Norad.

Key questions
  • How large is the VAT gap; i.e. the extent of evaded or avoided value-added tax? This will be estimated using a so-called bottom-up approach for measuring tax gaps.
  • How have recent changes in the registration of taxpayers influenced formality in Tanzania?
  • Are large, multinational corporations paying their fair share of taxes in Tanzania? If not, what could be done about it?