This is a presentation shared at the ICTD's Annual Centre Meeting The case: • 2008: TRA directed by Gov. to collect Property Tax (PT) on behalf of Dar es Salaam municipalities • 2014: Gov. announced that PT-collection should be returned to municipalities Not the first attempt to address PT challenges: • Outsourcing of collection to private agents Purpose of the study: • Document and analyse the experiences with this ‘experiment’ in order to inform subsequent reform efforts • Contribute to the knowledge base on intergovernmental cooperation Ø Ø  Ø Ø Ø Research questions Why was this initiative launched? Who was driving/resisting the process? What has been achieved Revenue enhancement? Capacity development of LG tax adm? New payment methods Taxpayer relations Policy implementation without intergovernmental cooperation? Future tax collaboration between TRA and LGAs?

1. 1
Policy implementation without cooperation:
Central-local government relations in property tax collection in Tanzania
Odd-Helge Fjeldstad & Lucas Katera
Chr. Michelsen Institute & REPOA
International Centre for Tax and Development
www.CMI.no & www.REPOA.or.tz
Arusha, 8 December 2014

2. Background
and
mo-va-on
Ø The case:
• 2008: TRA directed by Gov. to collect Property Tax (PT) on
behalf of Dar es Salaam municipalities
• 2014: Gov. announced that PT-collection should be returned to
municipalities
Ø Not the first attempt to address PT challenges:
• Outsourcing of collection to private agents
Ø Purpose of the study:
• Document and analyse the experiences with this ‘experiment’
in order to inform subsequent reform efforts
• Contribute to the knowledge base on intergovernmental
cooperation

3. Research questions
Ø Why was this initiative launched?
Ø Who was driving/resisting the process?
Ø What has been achieved
• Revenue enhancement?
• Capacity development of LG tax adm?
• New payment methods
• Taxpayer relations
Ø Policy implementation without intergovernmental
cooperation?
Ø Future tax collaboration between TRA and LGAs?

4. • Elected councilor (interviewed 24 June 2011):
“Even
though
the
council
were
not
involved
in
making
the
decision
we
did
not
object
the
direc8ves
because
we
thought
that
the
revenue
would
have
increased
which
is
a
benefit
to
the
council
in
terms
of
financing
the
planned
ac8vi8es.
If
only
we
knew
that
things
would
turn
to
be
bad
like
they
are
now
we
would
have
objected”.

5. Property
tax
revenues
as
reported
by
the
municipali9es
(nominal
million
TSh)

6. Property
tax
revenues
as
reported
by
TRA
(million
TSh,
nominal)

7. Property tax revenues reported as remitted to LGAs
by TRA (nominal million TSh)

8. Property tax revenues
as reported by the municipalities (real terms, million TSh

9. Property tax revenues as reported by TRA (million TSh,
real terms)

10. January 2014:
Returning PT-collection to the municipalities
TRA (interview, 21 October 2014):
• The whole process has been facing misunderstanding
between TRA and municipalities to the extent that a Regional
Committee was formed to discuss differences between them
and come up with solutions
• Negotiations were going on when the Government
announced that TRA should hand over back to municipalities
• However, up to now we [TRA] have never received a letter
stopping TRA from collecting property tax, though TRA
stopped from January 2014

11. Municipality A (interview, October 2014):
• Re-decentralization of property tax administration is a
perfect move. From the time TRA started to collect
property tax revenue deteriorated.
• I strongly believe that the collection by municipality will
be far better than that of TRA.
• First and foremost is that municipality knows that it is
collecting the money to finance its budget so all efforts
will be instituted to meet the target

12. Municipality B
(Interview 15 October 2014)
• Interaction between Municipality and TRA was very
difficult. In the first place, TRA considered itself
superior to the municipality

13. TRA
(Interview, 21 October 2014)
• All Municipalities are very happy about re-decentralization
of property tax collection because right from the start when
TRA took over they were disappointed
• They have been trying to make tricks so that TRA is perceived
inefficient
• For example, when TRA took over all municipalities set
larger targets to TRA year after year despite the fact that tax
base remained the same

14. Factors
affec-ng
the
outcome
Ø Politics
v Top-down driven (directive)
v TRA: Poor incentives and loss of reputation
v Municipalities: Lost ‘control’ of revenue collection
v Incongruent goals between TRA and the LGAs
v Distrust and preconceptions
§ TRA L Municipalities
Ø Technical design
v Poor preparation and implementation
v Outdated property registers and valuation rolls
v TRA introduced payment via bank deposits + TIN
v Reinforced distrust TRA L Municipalities

15. How to make organisations work together is a persistent
problem when political decisions are to be implemented
PROPOSITIONS:
• Mutual trust is necessary if goal congruence is to increase
cooperation between the agencies
• Mutual trust only has a positive effect if organisations have
similar objectives
• Trust and goal congruence must exist simultaneously in order
to promote joint actions

16. Future tax collaboration between TRA and LGAs?
• Collaboration requires that there is something in it for
all:
v What is in it for TRA?
v What is in it for the municipalities?

17. THANK
YOU
FOR
YOUR
ATTENTION!
ASANTE
SANA!