Lessons from Tanzania’s property tax reform in 2021: Perceptions of fairness and efficiency

Abstract

This study examines the effectiveness and taxpayer perceptions of Tanzania’s 2021 property tax reform, which introduced the use of electricity tokens for tax payment. The reform aimed to simplify tax collection and improve compliance by linking payments of property tax electricity purchases through the state-owned electricity provider Tanzania Electric Supply Company Limited (TANESCO). A survey of 509 property owners in Dar es Salaam and Morogoro reveals high awareness of the reform (81%), but mixed views on its fairness and equity. Many respondents (55%) believe the reform did not achieve equitable distribution of the tax burden. However, the use of electricity tokens was seen as efficient and cost-effective by 57% of respondents. Despite these operational advantages, concerns about fairness and limited reductions in tax burdens for lower-income groups persisted. The findings suggest that while the reform has improved administrative efficiency, more attention is needed to address issues of equity and public trust in the system. Policymakers are encouraged to consider valuation-based tax methods to ensure a fairer distribution of the property tax burden.

Lessons from Tanzania’s property tax reform in 2021: Perceptions of fairness and efficiency