Mzumbe University senior economist, Dr Prosper Ngowi
Through its public institutions, the government can produce the
1.5trn/- it gets in foreign budget support as the organisations generate
17trn/- annually.
Dr Ngowi made the remarks in an exclusive interview with The Guardian yesterday.
He said: “The potential is there. Currently there is under
collection of revenues from various sources including tax and none-tax
revenues. If proper efforts are put in place and proper strategies are
employed, the possibility of raising the sum and thereby kissing
donor-funding goodbye is there. Along with raising the revenue, the
expenditure side of the equation should be tightened.”
He insisted that in order to quit relying on external aid, a
number of things must be done so as to have realistic budget. These
include increasing revenue collection efforts, reducing unnecessary and
counterproductive tax exemptions, addressing tax avoidance and tax
evasion properly without forgetting very high discipline in the
expenditure of collected revenues.
“It is over 50 years since the “Baby Tanganyika became independent.
Not that it is still donor dependent in parts of its budget, the Baby
has not grown and graduated from the 'aid class'. However, efforts and
good steps have been taken towards budget independence,” he said.
He noted: “Unfortunately, we are yet to be where we want to be. If
we become brave as a nation and say no to aid, it can be a good
incentive/opportunity to be self-independent.”
Dr Ngowi also said that tax havens and tax illicit are the most dangerous, costing Tanzania huge loses.
“Tax havens are jurisdiction where some illicit (but also licit)
capital flows to. These tend to be secrecy jurisdictions abroad
including Europe, America, Asia and even Africa. Yes Tanzania as is the
case for other countries loses revenues that end up in these secrecy
jurisdictions,” he said.
He explained that it is challenging to get these funds back home
but it is possible, citing Nigeria which got back some of the 'Abacha
billions' after a number of decades of struggle.
On the impacts of tax havens to the economy of the nation, the Don
said: “Impacts of tax havens/illicit capital flight are negative, many
and far-reaching. The extent and nature of the impacts depend on the
nature of funds in the tax havens. These are likely to be monies
obtained from corruption, tax avoidance, human trafficking or drugs
trade and the like”.
“All these robe a country of the badly needed funds back home for
various uses - if tax avoidance/evasion/ means denying the country funds
that could be used to provide various public goods and service such as
education, health, water, infrastructure, security etc,” he said.
Speaking on the big gap between haves and have nots, he said the
gap has widened due to a number of reasons including marginalisation of
the poor by the system.
“If it happens because the poor are not making use of available
opportunities, then they are the ones to blame. The impacts of
increasing inequality are negative, many and far-reaching. Inequality
can breed crime, violence and many similar vices,” he said.
He concluded that statistically, the cost of living as measured by
inflation has indeed gone down on paper in recent years. “We had double
digit inflation a couple of years ago. We now have 'comfortable' single
digit inflation at a bit over 4 percent. Yet these figures are not felt
in real life. High prices have many causes including monetary and
structural causes. These need to be addressed properly.”
However, Deputy Finance Minister Mwigulu Nchemba was quoted
recently as saying that Tanzania is now on a journey of self dependency
when it comes to the national budget.
“There are many ways of getting funds to meet the budget,” noted
the Deputy Finance Minister and according to him, the nation also has
many public institutions with sufficient money to beef up the budget.
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