Tanzania Missed Property Tax Target by TZS 109 Billion as Collection Problems Persist

The Controller and Auditor General says Tanzania collected just 42% of its targeted property tax revenue in 2024/25, despite using electricity purchases to enforce payment. Historical tax records show collections fell 53% following earlier reforms, while a new study traces the country’s persistent revenue problems to incomplete property registers, weak valuation systems and repeated changes in administrative responsibility. UCHUMI360 | BANKING & CAPITAL / PUBLIC FINANCE | 8 NOVEMBER 2026 Tanzania collected TZS 80.28 billion in property tax during the 2024/25 financial year against a government target of TZS 188.96 billion, leaving a shortfall of TZS 108.68 billion and exposing persistent weaknesses in one of the country’s most underdeveloped sources of domestic revenue. The findings, published by the Controller and Auditor General (CAG) in March 2026, show that collections through the TANESCO prepaid electricity system reached only 42% of the annual target despite reforms intended to simplify payment, improve compliance and reduce revenue losses. The audit findings provide contemporary evidence of difficulties examined in a separate March 2026 study by the Africa Urban Lab at the African School of Economics Zanzibar. Titled Making Property Tax Work in Tanzania Mainland, the study traces the country’s repeated attempts to reorganise property tax administration between local governments and the Tanzania Revenue Authority (TRA), arguing that changes in collection institutions have frequently occurred without resolving incomplete property registers, weak valuation systems and conflicting administrative responsibilities. Historical records reveal how costly these weaknesses have been. Research published by REPOA in 2020, using TRA collection data, found that Tanzania’s property tax revenue increased from TZS 18.81 billion in 2014/15 to TZS 35.35 billion in 2017/18 before declining to TZS 16.47 billion in 2018/19, a contraction of approximately 53% in a single financial year. The researchers associated the decline particularly with the introduction of simplified flat property tax rates, which reduced the amounts payable on many higher value properties. National Audit Office of Tanzania +1 The latest findings show that the underlying administrative problems remain relevant. According to the 2024/25 audit of local governments⁠, property tax billing and remittances were delayed for weeks, revenue targets were set without adequate reference to historical performance, and the government had still not established a comprehensive database covering all taxable buildings. The scale of the problem is considerable. The CAG reported that Tanzania Mainland had approximately 13.9 million buildings according to the 2022 Population and Housing Census, but only about 3.1 million were connected to the national electricity grid. This meant that the LUKU collection mechanism, which relies on deductions from electricity purchases, could not directly reach most buildings without additional registration and billing arrangements. Not every building is legally subject to property tax, but the figures demonstrate the limitations of relying on electricity connections as the main instrument for identifying and collecting property rates. National Audit Office of Tanzania +1 The consequences extend beyond an isolated revenue shortfall. Property taxation is intended to provide a relatively predictable source of public revenue linked to buildings and urban development. As cities expand, construction activity increases and property values change, a functioning system can generate additional public resources for infrastructure and municipal services. Tanzania’s experience suggests that these potential gains are constrained by weaknesses in the institutions responsible for identifying, valuing, billing and collecting taxes on buildings. Tanzania’s Property Tax Revenue Fell 53% After Earlier Reforms The historical revenue figures provide an important starting point for understanding the current difficulties. According to REPOA’s Assessment of the Impact of Institutional Reforms on Mobilization of Property Tax Revenue⁠, tax collection increased during the period when local authorities were strengthening property registers and introducing improved revenue administration systems. The research documented collections of TZS 18.81 billion in 2014/15, rising to TZS 28.29 billion in 2015/16 and TZS 34.10 billion in 2016/17. Revenue continued increasing to TZS 35.35 billion in 2017/18 before falling sharply to TZS 16.47 billion in 2018/19. Source: REPOA, 2020, Figure 3.1, based on TRA administrative records. Values are nominal and have not been adjusted for inflation. The decline occurred after Tanzania introduced a simplified flat property tax assessment system. Under the earlier approach, property liabilities were linked more closely to assessed building values. The simplified system instead applied standard charges to broad categories of buildings, reducing the need for individual valuations but also lowering the tax payable on some valuable commercial and industrial properties. The REPOA researchers found that the change had a substantial effect on revenue performance, particularly in major urban tax regions. Their analysis showed that Kinondoni, Ilala, Mwanza, Temeke and other regions experienced weaker collections following the reforms, although the magnitude varied between locations. The findings indicate that simplifying a tax system can increase administrative convenience while reducing its revenue yield. A flat assessment may be easier for taxpayers to understand and cheaper for government agencies to administer, but it also limits the relationship between the value of a property and the amount collected from its owner. The historical numbers require careful interpretation because other research has used different data series. The March 2026 Africa Urban Lab case study presents a historical chart showing collections reaching more than TZS 43 billion in 2016/17 before falling sharply the following year. That series differs materially from REPOA’s TRA based figures, which show collections of TZS 34.10 billion in 2016/17 and TZS 35.35 billion in 2017/18. A 2017 parliamentary statement reported TZS 34.09 billion for 2016/17, closely matching REPOA. The Citizen +1 The discrepancy means the two historical series should not be combined into a single continuous trend without reconciling their definitions, reporting coverage and accounting treatment. The 53% decline between 2017/18 and 2018/19 is supported by REPOA’s identifiable TRA series, while the larger and earlier contraction depicted by Africa Urban Lab remains subject to that reconciliation. The 2024/25 Audit Shows the Collection System Still Has Major Gaps The latest audit findings suggest that Tanzania’s difficulties are no longer adequately explained by the level of property tax rates alone. Problems also arise from incomplete information, unrealistic revenue projections and the administrative processes through which payments reach the government. The CAG found that property tax revenue targets increased substantially from October 2024, without corresponding increases in actual collections. Monthly collection performance subsequently remained at approximately 32% to 37% of the targets, despite collections during the first three months of the financial year having been close to or above expectations. The auditor attributed the annual shortfall partly to projections that did not adequately reflect historical collection trends or the actual capacity of the revenue administration system. National Audit Office of Tanzania +1 2024/25 PROPERTY TAX PERFORMANCE TZS 188.96B Government collection target TZS 80.28B Actual LUKU collections 42% Share of target achieved TZS 108.68B Shortfall against target Source: Controller and Auditor General, 2024/25 local government audit, page 38. The audit also identified delays at two separate stages of the collection process. Billing delays involving the Prime Minister’s Office, Regional Administration and Local Government ranged from nine to 86 days, while TANESCO remittance delays ranged from 13 to 70 days. Such delays complicate the management of public finances because the timing of revenue availability is important alongside the amount eventually collected. Local governments prepare expenditure plans based on projected income, including resources expected to finance infrastructure maintenance, sanitation and other municipal responsibilities. Delayed remittances can disrupt those plans even where the underlying tax has already been paid. The CAG consequently recommended that the government strengthen revenue forecasting, automate billing and remittance procedures, and improve coordination between the institutions responsible for collecting and distributing property tax. The finding is particularly relevant because the 2021 LUKU reform was intended to address precisely these administrative problems. By making property tax part of routine prepaid electricity purchases, the government sought to establish a more predictable revenue stream and reduce the need to pursue individual taxpayers through traditional billing and enforcement arrangements. The technology made collection more immediate for properties connected to electricity, but it did not eliminate administrative weaknesses in property identification, revenue reconciliation or institutional coordination. More Than 10 Million Buildings Remain Outside Direct LUKU Billing Coverage The 2024/25 audit identifies incomplete property registration as a central obstacle to expanding collections. According to the CAG, Tanzania Mainland had approximately 13.9 million buildings in the 2022 census, of which about 3.1 million were connected to the national electricity grid. The auditor estimated that approximately 10.7 million buildings remained outside TANESCO’s direct billing coverage. These buildings are not necessarily all taxable. Some may qualify for statutory exemptions, while others may fall outside the relevant classification or require verification before any liability is established. Nevertheless, the coverage gap illustrates the difficulty of building a comprehensive property tax system around electricity meters. In principle, local authorities are responsible for identifying and recording buildings that are liable for property rates, including those without grid connections. In practice, the auditor found that the government had not established a comprehensive and reliable database covering all eligible properties, despite the introduction of the TAUSI property management module and arrangements with TANESCO for electricity based collections. National Audit Office of Tanzania +1 Property identification involves more than counting buildings. Authorities must determine where buildings are located, who is legally responsible for them, whether they are exempt and what assessment applies. These tasks require updated geographic information, property records and mechanisms for reflecting new construction, ownership changes and changes in building use. A major challenge is that much of Tanzania’s urban development has occurred outside formally planned and comprehensively registered areas. Buildings can be occupied, rented or used commercially without their records being consistently integrated into the systems used by land administrators and revenue authorities. The Africa Urban Lab study explains that property information has historically been distributed across several institutions. Local governments maintain property registers and valuation records, land authorities control information about occupancy rights, while tax collection agencies operate separate billing systems. When these databases are not adequately connected, changes recorded by one institution may not be reflected in another. This produces a gap between the number of buildings physically present in an area and those effectively included in property tax administration. The economic consequences can be substantial. An expanding urban property base should, in principle, broaden the government’s potential tax base. But new buildings do not automatically translate into additional revenue when they are not identified, registered and assessed. The problem also affects fairness. Owners of properties already captured in the collection system can face regular deductions, while comparable properties outside the system may remain unbilled. This unequal coverage undermines the consistency of tax administration even when the statutory rates themselves are uniform. Repeated Transfers Between TRA and Local Governments Weakened Continuity Tanzania’s property tax administration has undergone several major institutional changes since 2008. Before that period, local government authorities were predominantly responsible for identifying, assessing and collecting property rates. A partial centralisation arrangement involving TRA began in Dar es Salaam in 2008, followed by a return to local administration in 2014 and nationwide centralisation under TRA in 2016. The subsequent reforms included the 2021 integration of property tax collection into TANESCO’s LUKU system and renewed local government responsibilities for identifying and administering property rates. The March 2026 Africa Urban Lab study argues that the repeated transfers weakened continuity and contributed to fragmented responsibilities. Local authorities possessed detailed knowledge of properties within their jurisdictions but did not always control the collection process. Meanwhile, the national collection agency depended on information it did not independently produce or maintain. The incentives created by this arrangement are central to understanding the revenue problem. When a local government is responsible for maintaining a property register but does not directly control the collection of the corresponding revenue, the financial incentive to invest in continuous data improvements may weaken. Conversely, an agency responsible for collecting taxes can face substantial enforcement difficulties when its billing records depend on data maintained by institutions outside its control. Centralisation may offer administrative advantages, particularly through standardised systems and stronger monitoring. Local administration can provide better access to property information and closer relationships with taxpayers. Neither approach can reliably deliver sustained collections if responsibility for registration, valuation, billing and enforcement remains poorly coordinated. The historical research also shows that institutional changes have sometimes coincided with higher collections. REPOA documented substantial growth during the period of local government administration before the later decline associated with flat rate reforms. This suggests that the design of assessments, the quality of property information and the effectiveness of enforcement can influence revenue outcomes independently of which institution formally collects the tax. The more recent audit findings indicate that Tanzania continues to face coordination problems even after introducing digital collection systems. Property Tax Rates Have Increased, but Revenue Performance Remains Constrained Tanzania has also adjusted the rates charged on buildings. In June 2026, Deputy Finance Minister Laurent Luswetula told Parliament that the government was applying an annual property tax of TZS 18,000 to ordinary houses, equivalent to TZS 1,500 per month, while multistorey buildings were charged TZS 90,000 per floor annually, equivalent to TZS 7,500 monthly. The rates represent an increase from those introduced during the 2021 LUKU reform, when ordinary houses were charged TZS 12,000 annually and specified commercial building floors were charged TZS 60,000. According to the Ministry of Finance’s June 8 statement⁠, exemptions apply to certain categories of buildings, including grass and mud houses, places of worship, specified community service buildings and qualifying residences occupied by people aged 60 and above, subject to conditions including commercial use. MoF - Ministry of Finance The revised rates demonstrate that the government has attempted to increase revenue through changes in the amounts charged as well as the collection mechanism. However, a higher flat rate cannot fully resolve the problems of identifying buildings, assessing liability and ensuring that payments reach the appropriate public accounts. The structure also raises questions about how closely tax liabilities correspond to property values. Two ordinary residential buildings can differ substantially in construction quality, size, location and commercial value while falling into the same broad rate category. For a government seeking to generate more revenue from growing urban property wealth, this creates an important limitation. Increasing a uniform charge raises the burden across the affected category, but it does not necessarily capture a proportionately larger contribution from more valuable properties. Introducing detailed valuation systems would create additional administrative and financial requirements. Tanzania would need reliable property data, sufficient valuation capacity, clear assessment rules and processes through which taxpayers could challenge incorrect valuations. The cost and complexity of those reforms help explain why simplified assessments have remained attractive to revenue administrators. The question for policymakers is how to improve collection coverage and valuation accuracy without creating a system whose administrative costs absorb a disproportionate share of the additional revenue. Collections Continued in 2025/26, but the Full Year Position Remains Unclear More recent government figures show that property tax collection continued during the 2025/26 financial year, although the available data do not yet establish a directly comparable full year performance against the previous audit. In an April 1, 2026 statement to Parliament⁠, the government reported collecting TZS 61.13 billion in property tax by February 2026. Of that amount, TZS 48.9 billion had been transferred to the Consolidated Fund, while TZS 12.23 billion had been distributed among 184 local government authorities to strengthen property tax collection. The figures provide an official account of collections during the first eight months of the 2025/26 financial year. They cannot be treated as the annual total, and the division between Treasury transfers and local government allocations should not be confused with the total amount collected. Parliament of Tanzania +1 Another complication emerges from the National Bureau of Statistics’ latest Tax Statistics Report for 2024/25⁠, released in September 2026. Its local government revenue tables record property tax amounts of TZS 13.88 billion in 2023/24 and TZS 16.06 billion in 2024/25, compared with the CAG’s TZS 80.28 billion in LUKU collections during 2024/25. These figures describe different statistical and administrative categories. The NBS table covers property tax recorded within local government revenue statistics, while the CAG reports collections through the electricity based mechanism. They should not be interpreted as conflicting measures of identical revenue flows, nor should they be added together without establishing whether particular receipts are counted in both systems. National Bureau of Statistics +1 The distinction is relevant because property tax revenue can pass through different institutional accounts before its final distribution. Accurate assessment of performance requires information about the amounts collected, the agencies receiving the funds, transfers to the Treasury, allocations to local authorities and the timing of remittances. The evidence available by November 2026 establishes that the government missed its 2024/25 property tax target by a substantial margin and that collections continued during 2025/26. It does not yet establish whether the full year 2025/26 result represented a sustained improvement after accounting for changes in tax rates, registration coverage and reporting procedures. Tanzania’s Revenue Problem Is Increasingly About the Buildings It Cannot Account For The combined evidence from the CAG, REPOA and Africa Urban Lab points towards several longstanding weaknesses in Tanzania’s property tax administration. Historical collections were affected by changes in assessment methods and institutional responsibilities. More recent audits have identified incomplete building registers, delayed billing, weak coordination and revenue forecasts that exceeded demonstrated collection capacity. These problems have persisted despite the introduction of electronic payment systems and higher statutory charges. The 2024/25 shortfall is especially relevant because local authorities remain heavily dependent on financial transfers from the central government. The CAG reported that the country’s 184 local government authorities collected approximately TZS 1.46 trillion in own source revenue during that financial year, exceeding their combined target of TZS 1.32 trillion. Nevertheless, central government funding still accounted for approximately 82% of their total revenue. National Audit Office of Tanzania +1 The contrast shows that property tax underperformance is occurring within a broader local government revenue system that has demonstrated an ability to exceed some collection targets. Property rates have a different administrative foundation from business levies, market fees and other local charges because they require reliable information about a large and changing stock of buildings. As Tanzania’s urban population increases and construction expands, the potential tax base should also grow. Converting that physical expansion into dependable revenue requires identifying taxable buildings, maintaining accurate records, establishing clear liabilities and ensuring that payments reach public accounts. The 2024/25 audit recommended establishing a comprehensive and verified property database, including buildings without electricity connections, alongside improved billing, forecasting and remittance controls. These measures address weaknesses that researchers have documented for more than a decade. The next assessment of Tanzania’s property tax performance will therefore depend on more than whether annual collections increase. It will also require evidence that a greater proportion of eligible properties is being assessed, that revenue forecasts reflect realistic collection capacity, and that local authorities receive funds according to established procedures. Tanzania has already demonstrated that changing tax rates and collection institutions can produce substantial movements in revenue. Its remaining challenge is to establish an administrative system capable of sustaining collections as the country’s stock of urban property expands.