Building taxpayer culture in Mozambique, Tanzania and Zambia Odd-Helge Fjeldstad

1. Building taxpayer culture in Mozambique, Tanzania and Zambia Odd-Helge Fjeldstad Chr. Michelsen Institute & International Centre for Tax and Development www.CMI.no & www.ICTD.ac Oslo, 15 November 2012 1

2. Purposes of the study: Examine strategies and measures on how to build taxpayer cultures through constructive engagement between governments and citizens over tax issues in Mozambique, Tanzania and Zambia Advice the authorities on how this knowledge can be translated into practical, effective and concrete development policies

3. Non compliance Voluntary compliance

4. Is it right or wrong not to pay taxes? (Afrobarometer 2011/12)

5. Tanzania: 3 citizen surveysWhy do people pay taxes? Changes over time Why do people pay taxes?

6. In your experience, how easy or difficult is it to find out what taxes and fees your are supposed to pay to the government?(Afrobarometer 2011/12)

7. How do taxpayers perceive the Tax Agency?

10. Factors influencing taxpayer behavior • Opportunities • Economic deterrence • Perceived probability of detection and size of sanctions • Affordability • ‘Tax burden’ • Compliance costs • Benefits of registering as taxpayer • Perceptions of the tax system’s fairness • Provision of services in return for taxes paid • Practises/procedures for revenue collection • Comparative treatment • Others’ tax behaviour • Tax moral • Personal norms • Social norms

11. Areas for interventions to build taxpayer culture • Tax policy • Legislation: 3rd party info • PP-consultations • Tax incentives/exemptions • Tax adm. • Enforcement • Foster compliance • Technical capacity • Factors outside the tax system • Linking tax & public expenditure • Broader citizen engagement

12. Building taxpayer culture: Implications for policy 1. Strengthen tax policy making • TA to Min. of Finance: legislation & analytical capacity (e.g. 3rd part info.) • Advisory, training and research support to Parliamentarians • Document the extent and costs of tax exemptions 2. Develop tax administrative capacity • Better understanding of taxpayers: foster compliance, not simply enforce • Build expertise on specialised tax audit functions • Strengthen analytical capacity of the tax adm’s 3. Create broader citizen engagement around taxation • More emphasis on the ‘demand side’ to strengthen citizen engagement • A broader approach than natural resource taxation • Build local research capacity (domestic research institutions) • Inspire students to focus on tax topics (TJN) 4. A general warning for donor assistance • Avoid unhealthy ‘competition’ among development agencies • Donor coordination and cooperation should be emphasised

13. “In a society where tax morale is high, there are low levels of tax evasion and avoidance. It is only in a social culture where citizens generally appreciate their responsibility for sustaining state services and where they have a trust in their state institutions and leaders that a tax moral evolves” ADB (2010: 6) Rwanda Case Study

15. THANK YOU FOR YOUR ATTENTION!