Citizens' unwillingness to pay taxes and fees are considered to be a major obstacle to enhancing government revenues in Tanzania. Dealing with the policy problem of revenue enhancement requires some understanding of the factors underlying the individual's decision whether to pay or evade taxes. Taxpayers' views, however, are in short supply in the current policy debate. It is also likely that peoples' views may change over time with implications for policy design. Few studies have traced changes in citizens' perceptions on taxation over time. Based on survey data from 2003 and 2006, this paper aims to contribute to narrowing this knowledge gap. Key questions examined are: What changes - if any - can be observed with respect to factors impacting on peoples' willingness to pay or not? What do ordinary people consider to be the major challenges to improving the tax system in 2006 compared to 2003? The surveys comprised 1260 respondents in Bagamoyo DC, Ilala MC, Iringa DC, Kilosa DC, Moshi DC and Mwanza CC, and included respondents from 42 villages/mitaa. The two surveys covered the same localities in the case councils and the same questions were asked. The study finds that peoples' views on taxation are much more positive in 2006 compared to three years earlier. This is partly due to improvements in service delivery, particularly education, health, and law and order, and partly due to reforms which have led to less oppressive revenue collection. Corruption, however, is perceived by citizens to be a major problem in both surveys, with implications for their trust in government and government officials and, thus, their willingness to pay taxes and fees. One clear conclusion from the surveys is that citizens demand tougher actions against corrupt officials. There is also an increasing demand by citizens for more information on revenues collected and how the revenues are spent.

Odd-Helge Fjeldstad

Research Professor, Coordinator: Tax and Public Finance