Local Government Taxation Reform in Tanzania : A Poverty and Social Impact Analysis (PSIA), Report on Economic and Sector Work

Abstract

The 2005 Tanzania poverty and social impact analysis (PSIA) on local government tax reform was designed to examine the intended and unintended consequences on poverty reduction and growth in Tanzania of the tax reforms implemented in June 2003 and 2004. The main elements of the reform were the abolition of the flat rate development levy in 2003 along with nuisance taxes, and the abolition of business license fees for enterprises below a certain size and capping of those fees for larger enterprises in 2004. This PSIA had two principal aims: (a) to assess the distribution of the tax burden across different social and income groups and small businesses before and after the reforms; and (b) to inform other initiatives directed at fiscal policy reform in the context of Tanzania's decentralization.