Fighting Inequality Through a Progressive Tax System for a Just Future in Tanzania
DOI:
https://doi.org/10.51867/AQSSR.1.3.7Keywords:
Developing Countries, Inequality, Progressive Tax System, Wealth DistributionAbstract
The problem of inequality is one of the economic problems that developing countries still face including Tanzania. This research therefore focuses on presenting the status and trends of inequality and the progressive tax system to pay for a just future in Tanzania. Research was anchored on the Ability-to-Pay Principle. The study was typically a desk research whereby it dwelled on analyzing and synthesizing large amounts of complex secondary data/information and literature concerning the issue of inequality in Tanzania. The target population for this study consists of secondary data sources, which included Peer-reviewed journal articles on taxation and inequality Government reports and taxation data from the Tanzania Revenue Authority (TRA). A purposive sampling methodology was employed to choose relevant studies and reports. This approach ascertained that only sources directly related to the research goals were included. The sample consisted of 20 sources, selected based on criteria such as: Year of publication. Content analysis was adopted in analyzing data to discover themes, patterns and trends related to progressive tax systems, income inequality reduction, and wealth distribution. Key variables such as tax policies, inequality measures (Gini coefficient), and wealth distribution patterns were extracted and analyzed to determine the effectiveness of progressive taxation in Tanzania. Findings revealed that while progressive taxes can be a remedy, the presence of large informal sectors, as in Tanzania, hinder their reach. Thus, while Tanzania’s progressive tax structure holds potential, more reforms are in need to boost implementation alongside widening the tax base. Further, the study concluded that there is little wealth-related taxation in Tanzania. Also, assets such as land ownership or financial assets are hardly/not taxed. The study recommended that given the situation, there is a great need to improve the tax collection with a focus on the existing tax base in Tanzania.
References
Bachas, P., Gadenne, L., & Jensen, A. (2021). Informality, consumption taxes, and redistribution. NBER Working Paper, 27429.
https://doi.org/10.2139/ssrn.3951329 DOI: https://doi.org/10.2139/ssrn.3951329
Baer, K., & Hodge, S. (2020). Taxation and inequality in Sub-Saharan Africa. Journal of African Economies, 29(3), 380-401. https://doi.org/10.1093/jae/ejz019 DOI: https://doi.org/10.1093/jae/ejz019
Benedek, D., De Mooij, R., Keen, M., & Wingender, P. (2019). Varieties of VAT pass-through. International Tax and Public Finance, 27(6), 890-930. https://doi.org/10.1007/s10797-019-09566-5 DOI: https://doi.org/10.1007/s10797-019-09566-5
Duncan, D., & Peter, K. S. (2016). Unequal inequalities: Do progressive taxes reduce income inequality? International Tax and Public Finance, 23(4), 762-783. https://doi.org/10.1007/s10797-016-9412-5 DOI: https://doi.org/10.1007/s10797-016-9412-5
Esterberg, K. G. (2002). Qualitative methods in social research. McGraw-Hill.
Gale, W., & Thorpe, S. (2022). Rethinking the corporate income tax: The role of rent sharing. Urban Brookings Institution Tax Policy Center. Mimeo. https://doi.org/10.2139/ssrn.4093219 DOI: https://doi.org/10.2139/ssrn.4093219
Joseph, E. S. (2017). The dynamics of social inequalities in the present world. Roosevelt Institute Working Paper. Bogota, Colombia.
Kapera, M. O. (2017). Assessment of effectiveness of electronic fiscal devices in tax collection in Tanzania: A case of Arusha Region (Doctoral dissertation, The Open University of Tanzania).
Krippendorff, K. (2004). Content analysis: An introduction to its methodology (2nd ed.). Sage.
Mkumbo, A., & Matata, L. (2022). The role of tax policy in reducing inequality in Uganda. Uganda Economic Review, 12(2), 75-92. https://doi.org/10.1080/21650010.2022.2017593
Musgrave, R. A. (1959). The theory of public finance: A study in public economy. McGraw-Hill. https://doi.org/10.1007/978-1-349-23426-4 DOI: https://doi.org/10.1007/978-1-349-23426-4
Mwenda, J., & Kimuyu, P. (2019). Tax policy and wealth redistribution in East Africa: A comparative analysis of Tanzania and Kenya. African Development Review, 31(4), 543-556. https://doi.org/10.1111/1467-8268.12416 DOI: https://doi.org/10.1111/1467-8268.12416
Osei, R., & Quartey, P. (2021). Income inequality and progressive taxation in developing countries: The case of Ghana and Tanzania. Development Studies Research, 8(1), 114-130. https://doi.org/10.1080/21665095.2021.1915638
Polacko, M. (2021). Causes and consequences of income inequality: An overview. Statistics, Politics, and Policy, 12(2), 341-357. https://doi.org/10.1515/spp-2021-0017 DOI: https://doi.org/10.1515/spp-2021-0017
Seligman, E. R. A. (1914). The income tax: A study of the history, theory, and practice of income taxation at home and abroad. The Macmillan Company.
Shumba, H. (2017). Financial inclusion of the informal sector as an enabler to economic growth in Zimbabwe (Doctoral dissertation, University of Pretoria).
Stiglitz, J. E. (2015). The great divide: Unequal societies and what we can do about them. W.W. Norton & Company.
Thomas, A. (2020). Reassessing the regressivity of the VAT. OECD Taxation Working Papers, No. 49.
Vellutini, C., & Benítez, J. C. (2021). Measuring the redistributive capacity of tax policies. IMF Working Paper, No. WP/21/252.
https://doi.org/10.5089/9781589064089.001 DOI: https://doi.org/10.5089/9781589064089.001
World Bank. (2023). Gini index. Retrieved April 2, 2023, from https://databank.worldbank.org/reports.aspx?source=2&series=SI.POV.GINI&country=
Downloads
Published
Issue
Section
License
Copyright (c) 2024 African Quarterly Social Science Review
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.