TANZANIA-ECONOMY: DONORS U-TURN ON AID SUSPENSION POSITION

By IPS Correspondents Reprint | | Print |

DAR ES SALAAM, Nov 24 1994 (IPS) - THE OUTCOME OF A TAX EVASION PROBE INVOLVING TOP GOVERNMENT OFFICIALS WILL DETERMINE WHETHER WESTERN DONORS LIFT A FREEZE ON DEVELOPMENT AID TO TANZANIA.

“WE ARE EAGERLY WAITING FOR A REPORT ORDERED BY THE PRESIDENT AND EXPECT THE GOVERNMENT TO TAKE STEPS AGAINST THOSE WHO COLLUDED IN TAX EVASION,” A WESTERN DIPLOMAT SAID HERE THURSDAY.

THE DIPLOMAT, WHO REFUSED TO BE NAMED, SAID AFTER GETTING THE REPORT “DONORS WILL THEN DECIDE ON THE NEXT STEP”.

DONORS MET TUESDAY TO DISCUSS THE CHAOS IN THE SYSTEM OF REVENUE COLLECTION AND ALLEGATIONS OF CORRUPTION AMONG SENIOR OFFICIALS IN THE CASH-STRAPPED EAST AFRICAN COUNTRY.

LAST WEEK, SWEDEN, NORWAY AND OTHER WESTERN COUNTRIES WITHHELD NEARLY 30 MILLION DOLLARS AFTER REVELATIONS THAT TANZANIA COLLECTS ONLY 30 PERCENT OF ITS POTENTIAL TAX REVENUE.

ACCORDING TO THE COMPTROLLER AND AUDITOR-GENERAL, TANZANIAN PRESIDENT ALI HASSAN MWINYI FACES INVESTIGATION FOR ALLEGEDLY ORDERING ILLEGAL TAX EVASIONS AND EXEMPTIONS.

THE AUDITOR-GENERAL DISCLOSED THIS WEEK HIS OFFICE IS INVESTIGATING ALLEGATIONS THAT MWINYI HAD ORDERED THE EXEMPTIONS AMOUNTING TO SOME 35 MILLION DOLLARS IN A 1992/93 REPORT TO PARLIAMENT.

ESTIMATES OF TAX EVASIONS AND EXEMPTIONS AMOUNT TO MORE THAN 160 MILLION DOLLARS IN THE 1993 FINANCIAL YEAR ALONE, ACCORDING TO THE AUDITOR-GENERAL.

“WE WANT TO BE SURE THE MEASURES TAKEN, AND TO BE TAKEN, BY TANZANIA GOVERNMENT DURING THE COURSE AND AFTER INVESTIGATIONS WILL BE PROBLEM SOLVING,” HE SAID.

“WHATEVER STEPS IT WILL TAKE MUST STRENGTHEN TAX COLLECTION AND MANAGEMENT AND ENSURE THAT INCIDENTS OF THE PAST DO NOT HAPPEN AGAIN,” THE DONORS SAID IN A STATEMENT RELEASED AFTER THEIR MEETING.

“TANZANIA MUST TAKE STERN ACTION TO PREVENT A SIMILAR SITUATION FROM RECURRING. IF SUCH ACTION IS TAKEN AND MORE MONEY IS RECOVERED, THE TEMPORARY SUSPENSION OF FUNDS MIGHT BE LIFTED.”

TAX EXEMPTION HAD CREATED UNFAIR MARKET COMPETITION. FOR EXAMPLE, TRUCKS IMPORTED FROM CHINA THROUGH TANZANIA’S INVESTMENT PROMOTION CENTRE (IPC) COME IN DUTY FREE, WHILE THOSE FROM EUROPE ARE LIABLE FOR TAXES, CHARGED THE DIPLOMATS.

SWEDEN, ONE OF TANZANIA’S MAJOR BILATERAL DONORS, AND NORWAY LAST WEEK SUSPENDED DEVELOPMENT ASSISTANCE TO TANZANIA WORTH RESPECTIVELY 13.8 AND 15 MILLION DOLLARS.