Tanzania: Non-Tax Revenue - $33m Uncollected

Tanzania lost at least $33 million (about Sh40 billion) in uncollected non-tax forest revenue in the fiscal year 2006/07 as a result of the shortage of staff and supporting resources for the collection and prevention of illegal logging.
Finnish Embassy cooperation head Satu Santana told a recent general budget review meeting in Dar es Salaam that the low rates of investment and expenditure on forest revenue collection and forest law enforcement also limited the revenue collection from forestry.
The non-tax revenue in forestry consists of registration fees, forest royalty fees, export permits, and penalties for forest law violations.
In royalties of timber sales alone, which account to about 93 per cent of all forestry revenue collected, the Government loses around $23.8 million (Sh32 billion) annually.
Recent estimates show that the forest sector's total annual contribution is between 10 and 15 per cent of the total gross domestic product (GDP). At the current Government spending of 30 per cent of GDP, revenues from forestry would have contributed to more than half of the whole Government spending.
In the 2006/07 fiscal year the Government collected about Sh15.2 billion from forestry which was only 27 per cent of total revenue collection potential from forestry amounting to Sh55 billion annually ($46 million).
Development partners urged the Government to put its house in order and strengthen its revenue collection mechanisms from its natural resources.
They said it is incomprehensible that Tanzania should fail to collect so much revenue and still continue to depend on foreign aid to fund its budget.
Ms Santala stressed that inadequate Government expenditure on forest revenue collection and law enforcement contributed much of the poor performance in revenue collection.
"The ministry of Natural Resources and Tourism budget was cut by 13.8 per cent for 2007/08 which has directly affected the ministry's ability to effectively manage the forest resources and the revenue collection. The general problem is that there are not enough resources dedicated to forest law enforcement," she said.
She said although the forest sector's contribution to revenue collection increased from Sh4 billion in 2001 to about Sh15.2 billion in 2006 Government expenditure on forest activities particularly in relation to revenue collection decreased over the last few years.
The current collection of the forest revenue and its allocation and distribution do not support sustainable management or utilisation of forest resources. Current pricing mechanisms do not allocate resources efficiently.
"To be able to sustain the forest resources, more resources are needed for effective revenue collection and monitoring activities," she said.
She observed that multiple reports had consistently found that district forest offices and forest law enforcement offices both at Central Government and Local Government were understaffed.
The situation inhibits their ability to collect forest revenues and enforce the law.