Tax evasion and illicit trade have long been major obstacles to economic growth in Tanzania. Each year, the government loses billions in revenue due to counterfeiting, smuggling, and businesses underreporting their earnings. However, the implementation of SICPA’s Electronic Tax Stamps (ETS) technology is proving to be a game-changer in addressing these challenges. By enhancing transparency, accountability, and efficiency in tax collection, ETS is reshaping Tanzania’s fiscal landscape for the better.
A New Era of Revenue Collection
Speaking in Dar es Salaam, the Commissioner General of the Tanzania Revenue Authority (TRA), Yusufu Mwenda, highlighted the crucial role of advanced technologies in helping the authority exceed its revenue collection targets. The government had set a revenue collection goal of Sh29.415 trillion for the fiscal year, as part of the national Sh49.3 trillion budget approved by Parliament in June. To meet this target, TRA needed to collect an average of Sh2.45 trillion per month a daunting but achievable objective with the right systems in place.
According to TRA statistics, excise duty collected in the 2023/24 fiscal year accounted for 12.9% of total revenue in mainland Tanzania and 8% in Zanzibar. Excise duty is the third-largest source of revenue, following corporate tax (13.2%) and Value-Added Tax (VAT), which leads at 28%.
ETS: A Revolutionary Approach to Tax Collection
Electronic Tax Stamps (ETS) is a digital tax collection system designed to monitor and verify the production and distribution of excisable goods such as alcohol, tobacco, soft drinks, and other taxable products. Unlike traditional tax stamps, which were vulnerable to fraud and counterfeiting, ETS introduced secure, tamper-proof stamps embedded with digital tracking features. This allows tax authorities to trace goods from production to consumption, ensuring that businesses pay the correct taxes and that illicit trade is curtailed.
Since its introduction, ETS has revolutionized tax collection in Tanzania. Excise duty revenue has surged by an impressive 81.6%, contributing an additional TZS 2.608 trillion to government coffers. The alcoholic beverages sector, in particular, has seen remarkable growth, with excise duty on beer increasing by 82.9% and on spirits by a staggering 97%.
Combating Counterfeiting and Illicit Trade
Beyond revenue collection, ETS serves as a powerful tool in the fight against counterfeit goods and illegal trade. The system enables consumers and authorities to verify the authenticity of products, significantly reducing the circulation of substandard and hazardous goods in the market. This has been especially beneficial for industries such as tobacco, alcohol, and pharmaceuticals, where counterfeit products pose serious health risks.
Moreover, by discouraging smuggling and black-market transactions, ETS promotes fair competition among businesses. Legitimate enterprises no longer have to compete unfairly with tax-evading counterparts, fostering a healthier and more transparent business environment in Tanzania.
Challenges and Resistance to Change
Despite its numerous benefits, the adoption of ETS has faced some resistance, particularly from businesses that previously exploited loopholes in the tax system. Some companies argue that the cost of compliance is high, while others complain about the learning curve associated with integrating the technology. However, these concerns pale in comparison to the long-term benefits that ETS brings to both businesses and the government.
Authorities must continue engaging with stakeholders, providing training, and addressing any technical issues that arise to ensure smoother adoption. Public awareness campaigns can also play a crucial role in educating consumers and businesses about the benefits of ETS and encouraging widespread acceptance.
The Future of ETS in Tanzania
The success of ETS in Tanzania highlights the importance of leveraging technology to enhance governance and economic management. Expanding the system to more industries and refining its implementation can further boost efficiency and compliance. Additionally, continued government collaboration with SICPA and other technology providers will ensure that the system evolves with changing market dynamics.
ETS is a prime example of how digital solutions can revolutionize public finance management. If Tanzania remains committed to enforcing and improving this system, the country will enjoy increased revenue collection, a fairer business environment, and greater economic stability.
SICPA’s ETS technology is not just transforming tax collection in Tanzania—it is redefining the nation’s economic future. By promoting transparency, reducing tax evasion, and curbing illicit trade, ETS is helping the country secure vital resources for national development. The road ahead may present challenges, but with strong policies and continued technological advancements, Tanzania stands to reap immense economic benefits from this groundbreaking innovation.
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