Maybe we should pay tax after all? citizen's changing views on taxation in Tanzania

This paper examines the public’s perception of tax compliance in Tanzania, and the consequent implications for policy design. Using citizens' surveys, it evaluates changes in factors impacting on people’s willingness to pay taxes and the main challenges to improving the tax system in 2006 relative to 2003.

The paper finds that:

• the general level of claimed compliance was higher in 2006 relative to 2003 and reported compliance increased with the respondent’s level of education
• the public had more trust in the government’s ability to provide public services in 2006
• the public regarded revenue collectors as responsible for poor tax collection in both surveys supporting the perception that dishonest tax collectors are one of the major problems in tax collection
• the majority of respondents said they would be willing to pay more taxes if services improved

The results indicate a more positive attitude towards tax in 2006 relative to 2003, due to improvements in service delivery, health, education, law and order, as well as reforms that have led to less oppressive revenue collection. Corruption is still regarded to be a major problem and negatively impacts on the public’s trust in government officials and institutions hence on the willingness to pay taxes and fees.

The paper suggests that from a policy perspective a major challenge is to enhance the link between tax payments and service delivery. Tough action on corrupt officials is also vital as the public believe that stronger punishment of council staff and politicians guilty of mismanagement is the best way to improve the taxation system. Transparency also emerged as a way of improving the use of public revenues, such as providing more information on revenues collected and how they are spent.Building trust between the public and the government was also important.