The Tanzania Revenue Authority (TRA) has pronounced a 6.42-percent drop in revenue collection in the first half of the 2008/2009 fiscal year, according to local media reports on Monday.
The state revenue collection agency said that some 2.113 trillion Tanzanian shillings (1.76 billion U.S. dollars) were collected between June and December 2008, against the budgetary projection of a collection of 2.258 trillion shillings (1.88 billion dollars).
The Tanzania Revenue Authority is expected to collect 4.497 trillion shillings (3.74 billion dollars) tax revenue for the entire fiscal year whereas the government of Tanzania is budgeted with a spending of 7.216 trillion shillings (6.01 billion dollars) over the same period.
English newspaper The Citizen on Monday quoted Protas Mmanda, taxpayer service director with the Tanzania Revenue Authority, as saying that the dwindling revenue collection would force the government to reduce expenditure on the provision of goods and services.
The official added that the ongoing financial crisis had resulted in the narrowing of the tax base by affecting some large multi-national companies especially in the tourism sector.
Economists and analysts have warned that Tanzania's economic growth may well be affected by such adverse factors as inflation, current account deficit, low level of domestic revenue generation rather than reduced international aid inflow amid the ongoing financial crisis.
An International Monetary Fund report has warned that lower growth would dampen government revenues, suggesting that the current path of spending would lead to widening fiscal deficits and a financing gap.
The IMF has identified that the real weaknesses of Tanzania's economy was its huge current account deficit which averages 13.3 percent of the country's annual gross domestic product over the 2005-2011 period.
Local economists have added low level of domestic revenue as another adverse factor to affect the country's real growth.
In the current fiscal year ending in June, domestic revenue is projected to account for 16 percent of the Tanzanian GDP which is valued at 19 billion dollars now. The ratio was 12.5 percent two years back.