How VAT reductions on capital commodities can foster industrialization and boost growth in Tanzania

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The Tanzanian government is introducing a VAT exemption on capital goods to foster industrialization as part of the Tanzania Development Vision 2025. A team of local PEP researchers sought to understand the short-term impact of the policy on households and the overall economy, and whether a partial VAT reduction would provoke the intended economic benefits without reducing government revenues too much. They found that a 10% VAT reduction on capital commodities can contribute to economic growth. 
Find out more about the research methods, findings and policy recommendations in the following PEP publications:

Reports: 

Working Paper 2019-07 | Policy Brief 190 | More about the PEP-PAGE II initiative

Research team: 

Asiya Maskaeva | Nicodemas Lema | Joel Mmasa | Mgeni Msafiri

Country: 
Tanzania
Project code: 
MPIA-19971
Project link: 
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