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Arusha increases revenue collection with 71 %, increases public investments

15.01.2016  06:52

In the shade under a tree along one of Arusha’s busy main roads, sits Zulfa Said. Equipped with a small devise that looks like the supermarkets’ credit card machine commonly known as point of sales machine and a notebook, she is at the forefront of Arusha’s new revolutionary tax collection scheme. Every morning, she goes to one of the city’s main bus terminals and registers all the Daladalas (small busses). Later in the day, she collects the 500 shillings that each vehicle needs to pay in daily taxes, and with the register she made in the morning, she makes sure that all daladalas contribute with their share. Zulfa’s work is part of an extraordinary project that has increased Arusha’s tax revenue with 71 % in the last year.

Tax collection Arusha 

New technology and open dialogue

A few years back, Arusha’s register of tax payers was flawed and incomplete, 70 % of Arusha’s citizens weren’t used to paying taxes, and many of the city’s small businesses didn’t keep books. The room for improvement was significant, but building up a tax system or a brand new tax system isn’t easy. With financial and technical support from Denmark, the city was able to replace the former manual tax system with a modern one known as Local Government Revenue Collection Information System (LGRCIS) that uses geographic information systems to locate tax payer and social services within the city including properties. Through LGRCIS all regietred properties are valuated and clients are sent invoices of how much each of them need to pay in property tax.

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Data clerks at work. They are building up the tax payer database from the ground.

Modern technology doesn’t make it alone. It takes much more to convince people that they should pay taxes. Arusha City Council started massive public campaigns explaining citizens why the taxes where collected. In the beginning the project met scepticism, but as the newly collected taxes were invested in better roads, labs in secondary schools and hospital facilities, the citizens began to see how they benefitted when the City Council’s budget became bigger. Through dialogue and public announcement in tax offices of how much had been collected each month, the City Council managed to create the transparency and dialogue needed to build trust in the project.

“Our money, our project”

Arusha is among the 8 cities implementing the Tanzania Strategic Cities Project. The project was launched in early 2011 and is supported by the World Bank and the Embassy of Denmark. In December 2015, a group of delegates from the Tanzanian Government, the World Bank and the Danish Embassy went to Arusha to see the city’s impressive results.

Arusha’s city council is – understandably – proud of their work. With the new tax money, the city council isn’t much dependent on money from central government or donors, when they want to invest in their city. The local politicians are now better able to react to the needs they see in their communities. The project is new and there are still challenges. The administrative personal are working hard to build up and maintain the database over tax payers and coordinate with central government, but Arusha’s city council are putting money aside to ensure the sustainability of the project. More importantly, the pride that the city’s politicians are expressing, in being able to decide themselves which projects they want to invest in, is creating a desire among decision-makers to expand, sustain and maintain the Local Government Revenue Collection and Information System (LGRCIS).

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 An joint evaluation mission from the Danish Embassy, the World Bank and the Tanzanian Prime Minister's office visited Arusha to see the city's progress with the tax project.



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