Responding to questions in debate on estimates of the Ministry of Industry and Trade for the next financial year, the deputy minister for Finance and Planning, Dr Ashatu Kijaji said a total of 16,252 were closed between July 2018 and April 2019.
However, the deputy minister who sought to clarify concerns raised by parliamentarians that the economy was nose-diving, said the situation was not that bad because a total of 147,818 business units were opened in the same period.
“That is the reality. If things were that bad, how could the Tanzania Revenue Authority (TRA) continue collecting taxes? If things were that bad our economy would have been rated as dormant,” Dr Kijaji noted.
She asserted that suggestions that the economy was performing poorly were at variance with reality, given the fact that since President John Magufuli came to office, monthly revenue collections by TRA have never gone below one trillion/-.
The MPs’ concerns cited unfriendly government policies towards businesses especially in tax collection, which is said to scare away investors on the one hand and closure of already operating businesses.
Last month, the executive director of the Tanzania Investment Centre (TIC) Geoffrey Mwambe criticised TRA for discouraging investments in the country through harsh tax collection methods.
Speaking to reporters in Dar es Salaam, Mwambe who is also a member of the TRA board of directors said officials from the central government revenue collection agency have in recent years been closing businesses failing to pay taxes and fines on time “instead of engaging them to know the challenges they face.”
The ‘money or padlock’ approach, Mwambe said, was discouraging local and foreign investors and scaring away potential ones intending to set up businesses.
“The TRA’s approach of closing businesses exacerbates the burden of non-performing loans in commercials banks, leading to higher interest rates by financial institutions,” he similarly noted.
In March, the Bank of Tanzania (BoT) carried out raids on currency trading shops in Dar es Salaam to conduct an impromptu audit of their activities following a similar exercise in Arusha at last year’s end. BoT said the exercise would continue in other parts of the country.
The central bank highlighted that on February 27, 2019, the Bank of Tanzania conducted “normal inspection of bureaux de change in Dar es Salaam and established that many of the shops operated without following the law and regulations governing their businesses.”
Following inspections unearthing irregularities, “deregistering all culprit shops was underway and the exercise will continue for the foreseeable future.” During its December 2018 inspection exercise countrywide, it was established that many bureaux de change were operating clandestinely, the statement intoned.