By A Special Correspondent
In a landmark move to anchor long-term fiscal resilience and inclusive development, Tanzania launched its Medium-Term Revenue Strategy (MTRS) in July 2024.
The fiscal strategy marks a significant departure from the country’s previous reliance on short-term, patchwork revenue measures – ushering in a new era of structured, sustainable, and equitable tax reform.
Developed in collaboration with key stakeholders and supported by international partners such as the International Monetary Fund (IMF), the MTRS outlines a comprehensive, three-year roadmap to boost domestic revenue mobilization while promoting economic fairness and transparency.
Breaking with the past
For years, Tanzania’s fiscal landscape has been shaped by stopgap tax policies – temporary adjustments and exemptions often driven by immediate budget needs rather than long-term strategy.
In a recent report, the Bretton Woods institution says that the MTRS represents a decisive break from that trend. It sets out a coherent framework for tax policy and administration reform aimed at delivering consistent and predictable revenue growth.
At its core, the MTRS aims to:
- Increase the tax-to-GDP ratio by at least 1 percentage point over the implementation period (FY2025/26–FY2027/28).
- Expand the national tax base by bringing informal and digital sectors into the fold.
- Improve compliance and enforcement through digital tools and legal reforms.
- Reduce inefficient tax incentives and curb revenue leakages.
- Ensure equity and fairness in the tax system by minimizing burdens on low-income groups while targeting high-potential sectors.
This systemic approach is designed not only to improve the performance of the Tanzania Revenue Authority (TRA) but also to enhance public trust and investor confidence in the country’s fiscal management.
A phased approach to lasting impact
The MTRS is structured around a three-phase implementation plan:
FY2025/26:
- Lays the foundation with digital system upgrades, legal reforms, and publication of tax expenditure reports. These efforts are expected to generate an additional 0.5% of GDP in revenue.
FY2026/27:
- Focuses on expanding the tax base and scaling back costly exemptions – particularly in sectors where compliance has historically been low.
FY2027/28:
- Consolidates the reforms to ensure sustainability, targeting a 1.0% GDP increase in annual revenue from improved compliance and administrative efficiencies.
This phased timeline allows for broad coordination across government ministries, private sector engagement, and ongoing consultation with civil society and development partners.
Why the MTRS matters now
The timing of the MTRS is critical. With rising demands for public investment in infrastructure, climate resilience, education, and health, Tanzania must move toward greater fiscal self-reliance.
The MTRS provides a pathway to reduce the country’s dependence on external aid and debt, while ensuring that revenues are deployed in ways that directly benefit the population.
Key benefits of the strategy include:
- More predictable fiscal planning for businesses and investors.
- Expanded fiscal space for pro-poor and development-oriented spending.
- Increased accountability and transparency in tax administration.
- Strengthened economic independence, aligned with the goals of the Third Five-Year National Development Plan (FYDP III).
Governance and oversight
The Ministry of Finance, together with the TRA, is leading the implementation of the MTRS. To oversee progress and troubleshoot challenges, the government has established an Inter-Agency Steering Committee that includes representatives from key ministries, agencies, and non-state actors.
This committee will report annually to Parliament and the public, ensuring a high degree of transparency and accountability.
Meanwhile, the IMF, World Bank, and other partners are supporting the process through technical assistance and capacity-building initiatives, ensuring that reforms are grounded in global best practices.
Challenges ahead
While the MTRS is comprehensive, its success depends on strong political will, institutional coordination, and public support.
Resistance may arise, particularly around the reduction of tax exemptions and efforts to tax the informal sector. Yet, these reforms are necessary for long-term fiscal stability and equitable growth.
If implemented effectively, Tanzania’s MTRS could become a model for revenue reform across the region, showing how developing economies can shift away from short-term revenue fixes toward a sustainable, inclusive fiscal future.
Experts opinion
Fiscal authorities say that the Medium-Term Revenue Strategy is more than a revenue tool – it is a strategic framework that signals a new direction in economic governance. By moving beyond reactive tax policies and embracing a long-term vision, Tanzania is taking a decisive step toward building a fairer, more resilient economy – one where every shilling counts, and every citizen benefits.
