NATIONAL INSTITUTE OF TRANSPORT

DEPARTMENT OF BUSINESS AND ENTERPRENEURSHIP STUDIES

COURSE : BBA

STREAM :A

MODULE CODE : BBU 07102

MODULE NAME : BUSINESS TAXATION

TASK : INDIVIDUAL ASSIGNMENT 1

STUDENT NAME : BUNDALA, EMMANUEL MAIGE

REGISTRATION NUMBER : NIT/BBA/2019/779

LECTURER NAME : FAUSTINE MASUNGA

SEMESTER :1

ACADEMIC YEAR : 2019/2020

SUBMISSION DATE : 22nd NOVEMBER 2019

Question;

1. There have been different school of thought from different academicians and practitioners
in the word as well as local area whether there is directly between taxation and governance.
Explain the relationship between taxation and governance in Tanzania.

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 According to Nightingale, 2002 taxation as compulsory transfers from individuals to the
government. A tax structure is supposed to have the following features equity, efficiency,
convenience, certainty, productivity, political feasibility and constitutional acceptance. Prior to June
1996, tax administrative in Tanzania was under three independent revenue department namely:
Income Tax Department, Sales Tax Department current known Value Added Tax Department, and
Customs and Excise Department. The three department was under the Civil Services Structure and
the Ministry of Finance was responsible for the direction and control of these independent
department whose performance was not efficiently. The government determine to improve the
revenue collection situation through an improved tax administration system which operates under
one institution. Followed with the establishment of Semi-Autonomous tax administration by the
government and Tanzania Revenue Authority was set up on 1st July 1996 (Osoro, 1995).

According to Approved Quality Management System Document (Tanzania Revenue Authority, 2011)
the taxation process in Tanzania passes through six stages which are tax returns, data entry
operators capture data into the information system, the data entry supervisor validates and
authorizes posting of data, registry derk sort the returns by type and forwards to the Head
Examination Unit, tax officer examines the returns to ascertain compliance with the laws.

Governance refers, therefore to all processes of governing, whether undertaken by a government,

formal or informal organisation and territory whether through laws, norms, power or language
(Bevir, Mark 2012). Governance differ from government in that it focuses less on the state and it’s
institutions and more on social practices and activities. Governance can also be defined as the way
rules, norms and actions are structured, sustained, regulated and held accountable.

Though there different school of thought from different academicians and practitioners in the world
as well as local area whether there is directly between taxation and governance, the followi

ng are relationship between taxation and governance in Tanzania:-

Quality of the governance can strongly influence revenue mobilization; Besides tax
administrator in Tanzania, collection does not depends only on the risks and costs of non compliance
as determined by inspections, audit, enforcement and penalties. It also hinges on the so-called
culture of compliance, which is driven by legitimacy of the government and perceptions of fairness
in the tax system. Perhaps the most important factor though, the quality of public expenditure
management, where citizens perceptions of reciprocity are determined by the valued of public
services they get in return for paying taxes ( Bird, 2010; OECD, 2008).

The imposition of Tax is good for the quality of governance; in that being taxed engages
citizens in political process while dependence of governments on tax revenue encourages
bargaining with taxpayers ( Moore, 2008). Tax obligations can trigger demands for greater
responsiveness and accountability, better management of public expenditures, improved public
services, more efficient institutions and stronger oversight by parliament and civil society. At the
same time, the structure of Tax system can deeply influence the relationship government and it’s
citizens. (OECD, 2008; Pritchard, 2009 and 2010; Everest Phillips, 2010).

The centrality of taxation to the role of state in the social contract; as defined by political
institutions, influence networks, economic interests, social relationships and government
capabilities. In Tanzania the effective programme to strengthen a country's tax system has to take
into account the commitment of national leaders, the influence of interest groups, the political
incentives for sustainable reforms, the role of policy dialogue and the quality of information
available to decision makers on the effect of decisions. Such aid programmes to support the tax

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system can work only when reforms are consistent with the domestic political agenda (Pritchard,
2010).

Taxation itself along with effective expenditure management is central to the state
building capability and fundamental component of good governance. Tax Reforms can also be a
point of entry for fostering broader improvements in state capacity ( Beautiful, 2008). In Tanzania
any serious programme to strengthening revenue performance creates a need to strengthening
related function like budget management, fiscal policy analysis, courts and the judiciary, and the
agencies responsible for business and property registration. Similarly, programme to professionalise
tax administration by introducing strategic planning, merit based personnel management or modern
tax information systems, can set example that other areas of government emulate.

In generally; these benefits are however far from assured. Tax payers struggle to mobilize
collectively, governments often refuse to make concessions to taxpayers or make concessions only
to large taxpayers. Any civilized government depend on tax in order to ensure provision of public
goods and services, redistribution of income and wealth among members. This is through canon of
Taxation such as; equity, efficiency, convenience, certainty, productivity, political feasibility and
constitutional acceptance.

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REFERENCES

Wilson Prichard (May, 2010) Taxation and State Building, Toward a Governance Focused Tax Reform
Agenda.

Nightingale, k (2002) Taxation theory and practice (4th Edition), England: Personal Education Limited.

Samson, D.W (2002) History of Taxation In Laymer, A and Hasseldine, J, (2002) The International
Taxation System Alabama USA.

Osoro, N.E (1993) Revenue Productivity Implication of Tax Reform in Tanzania, African Economic
Research Consortium.

Osoro, N.E (1995) Tax Reform in Tanzania: Motivation, Directions and Implications. African Economic
Research Consortium.

Brautigam, D. (2008). Introduction: taxation and state building in developing countries. Cambridge
UK: Cambridge University Press.

Bird, R. (2010), Taxation and development, “Economic Promise Issue 34, World Bank, Washington,
DC

Everest Phillips, N. (2010). State Building for developing countries: Principle for reform.

OECD (2008), Governance, Taxation and Accountability: Issue and Practices, OECD.

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