Revenue Productivity Implications of Tax Reform in Tanzania

"The purpose of this study is to examine the revenue productivity implications of tax reform in Tanzania, focusing it as a way of raising the productivity of the tax system. Specific objectives are: (1) to analyze the productivity performance of the tax system and individual major taxes, which will entail the analysis of tax elasticity at two levels, base-to-income elasticity and tax-to-base elasticity; and (2) to link the tax exemption analysis with the discussion and empirical estimation of tax elasticities. In particular, the objective is to assess the impact of exemptions on elasticities. Section II summarizes the theoretical discussion on tax reform. Section III provides an overview of tax reform. Section IV discusses the revenue productivity of Tanzanian taxes and the overall tax system. The section provides a definition of buoyancy and elasticity, a discussion of techniques of measuring elasticity and buoyancy, and a survey of empirical results. Section V links tax exemption analysis to an empirical estimation of tax elasticities. Section VI provides the conclusions."