Non-resource taxation in a resource rich setting: A broader tax base will enhance tax compliance in Tanzania

Abstract

Huge reservoirs of natural gas have been discovered offshore the southern coast of Tanzania. The country might become a large producer of gas, and a potential exporter of liquefied natural gas (LNG) during the next decades. With this comes the promise of significant petro-revenues and prospects of natural gas-driven structural transformation, bringing with it improved economic and social conditions for the people of Tanzania. However, experiences from other countries suggest that it is challenging to turn natural resource wealth into improved welfare for the majority of citizens. In this brief, we focus on challenges related to the management of government revenues, particularly tax. We argue that continued efforts to expand the non-resource tax base is essential for successful management of the resource wealth. This brief is based on a study that is joint work with Professors Alexander Cappelen and Bertil Tungodden, Department of Economics and The Choice Lab, NHH.