Agricultural Produce Cess in Tanzania: Policy Options for Fiscal Reforms

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October 1, 2014 - Tanzania FSP project team

Tanzania FSP project team. 2014. Agricultural Produce Cess in Tanzania: Policy Options for Fiscal Reforms. Feed the Future Innovation Lab for Food Security Policy Research Brief 2. East Lansing: Michigan State University

KEY FINDINGS

  1. Dependence on the produce cess varies widely among rural LGAs, from 0% of total locally generated revenue in Ngorongoro to 90% in Urambo;
  2.  Relative to the value of their marketed production, traditional export crops generate more than three times as much cess revenue as do food crops;
  3. Much potential cess revenue goes uncollected: nationally, LGAs collect not more than one-quarter of the revenue that is potentially available to them from produce cess charges. This low level of collection reflects both limited human and institutional capacity at local level and widespread tax evasion, some of it likely featuring the collaboration of some local officials;
  4. Because it is charged on the gross value of production, current cess rates can result in very high tax (even confiscatory) on net revenue among farmers that use a large amount of inputs but experience small net margins.

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Tag List
  • aspires,
  • c1/c2,
  • fiscal reform,
  • food security group,
  • fsp policy brief,
  • innovation lab for food security policy,
  • tanzania,
  • taxes
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