High taxation hampers agricultural, says ex-finance minister

Excessive taxation of farmers, seen in an array of levies imposed on agricultural produce by Tanzanian authorities, has been a major hindrance to agricultural growth, the country's former finance minister told IRIN on Wednesday. Edwin Mtei, also a former governor of the Tanzanian Central Bank, said that a recent study by the prime minister's office showed that Tanzanian farmers had to pay 55 different taxes, more than double any other country in Africa. He said the taxes comprised cesses, levies, duties, fees and license fees, animal fees, land rents and forced contributions. Mtei, who now chairs the Tanganyika Coffee Growers Association, urged the government to reassess the taxes, "with a view [to] harmonising them at the lowest possible level". He said government should abolish taxes that adversely affected exports and should consider "altogether abolishing taxation” at the agricultural production level and shifting the burden to the agro-processing level. "In order to encourage agriculture, most governments which impose tax on produce should plough back such revenue into the specific sub-sector by way of financing research and provision of extension services," he said. Citing the coffee industry, he said that countries such as Kenya, Uganda, Costa Rica and Guatemala put at least 90 percent of coffee-derived revenue back into the industry. However, in Tanzania, he said, "a mere 37.2 percent goes back into coffee research and other support services while 62.8 percent is general revenue for the government and its other institutions." He said although the government was "moving in the right direction" in tackling macroeconomic problems that have stunted agricultural growth, it had yet to address taxation seriously. According to the Bank of Tanzania's latest figures, agriculture is the largest single sector of the economy, contributing 48.2 percent of the Gross Domestic Product in the year 2001, and providing the basis of livelihood for more than 80 percent of Tanzania's population.