Public Funds Utilization Vs Tax Paying Appetite

I noticed that TZS 6.875 billion was paid from Tourism Development Levy funds without the approval of the accounting officer contrary to prescribed regulations. I also noticed that total expenditure of TZS 16.363 billion were done but there was no requisite documentary evidence”.

The aforestated were the words of Controller and Auditor General (CAG), Charles Kichere, detailing the observed flaws and irregularities in relation to tourism ministry public spending during the fiscal year ending June 2020 audit.

In his report, the CAG reiterated that a total of over TZS 34.98 billion has been misused in relation to tourism ministry public spending. He further reiterated that several flaws and irregularities were observed during the public expenditure audit for the relevant fiscal year.

The observed flaws and irregularities are disheartening in nature as the same completely contravenes “Principle of Economy” which is one among the principles of public funds utilization. The other principles of public funds utilization include “Principle of Maximum Social Advantage”, “Principle of Sanction”, Principle of Balanced Budget”, “Principle of Elasticity” and Lack of Unethical effect on Production and Distribution”.

The Principle of Economy requires the Government to expend the public funds in a manner that averts all wasteful expenses. In a nutshell the principle reiterates that “if the hard-earned money of the people, collected through taxes and other sources is spent thoughtlessly, the public expenditure will not conform to the canon of economy”.

Deftly scrutinization of the CAG report for the fiscal year ending June 2020, revealed several instances of misuse of public funds hence contravention of the aforestated “Principle of Economy”. As the canon of economy tend to have a direct relationship with tax paying appetite among requisite taxpayers, failure to conform to such canon will likely deter such appetite.

The aforestated relationship emanates from the fact that public funds are financed vide tax financing sources and non – tax financing sources hence utilization of the public funds will always have direct impact on tax paying appetite among the requisite taxpayers. For instance, tax financing sources account for more than fifty percent (50%) of the fiscal revenue in Tanzania thus impact of not conforming to the “Principle of Economy” in relation to public spending should never be underestimated.

Conclusively, the onus is now on the Government to ensure all personnel responsible for observed flaws and irregularities during the relevant fiscal year audit are held accountable as well as strategizing to avert all wasteful expenses in the subsequent fiscal year. Such approach will ensure the public funds utilization conform to the Principle of Economy which will in turn strengthen tax paying appetite among the requisite taxpayers.

Benedict is a Tax Enthusiast focusing mainly on Direct and Indirect Taxation and the Views expressed herein are his own personal views.