Commodity Trade Potential in Tanzania: What Went Wrong With the Mineral Sector?

Abstract

This paper analyses the facts causing the mineral sector to make less of a contribution to the country’s economy. Although the sector accounts for nearly half of the country’s exports, ordinary Tanzanians are not benefiting from this because the government has implemented tax laws that overly favour multinational mining companies. Companies claim to make loss and so avoid paying taxes although they still invest in the country The system is also perceived to be lacking transparency. It is argued that the combined loss to the country is a result of low royalty rates, unpaid corporation taxes and tax evasion by major gold mining companies. This may be the reason why Tanzania is not getting its ‘fair share’ from mineral extraction. The paper suggests that, the government should increase its share of the profits by increasing taxes and the percent of loyalties in order to realize more benefits from the minerals sector.