Taxing the Informal Sector: A Case of Dar es Salaam Street Vendors

Taxation plays an important role in raising revenue to sustainably finance development for economic growth. It is argued that the taxation of the informal sector in Tanzania is important given the large size of the sector and as a way of preserving the incentive system and promoting one of the canons of taxation, which is equity. The presumptive income tax system has been regarded as an effective way that facilitates administrative efficiency; minimizes time for tax collection; enhances compliance; eliminates chances of tax evasion, rationalizes the turnover tax regime and increases revenue. The study suggests that the majority of street vendors in Dar es Salaam town centres are capable and willing to pay presumptive income tax. However, the lack of a proper regulatory framework to accommodate the use of urban spaces have affected the implementation of the presumptive taxing scheme.