Why TRA Should Lower Import Duty on Newer Cars and Penalize Older Ones

By Uchumi360 Editorial Desk

For years, Tanzanians have paid the price of a broken vehicle import policy, literally and figuratively. High import duties have kept relatively new, safe, and fuel-efficient cars out of reach for most people, while the same policy structure has quietly encouraged the influx of aging, smoke-belching vehicles. The result: congested roads filled with unsafe cars, worsening urban air pollution, and a growing public health burden.

It’s time for the Tanzania Revenue Authority (TRA) to flip the equation, make newer cars cheaper to import and old ones more expensive. This isn’t a populist idea; it’s a smart economic reform with environmental, fiscal, and social logic behind it.

The wrong incentives are costing us all

Right now, Tanzania’s import tax regime treats all used cars almost the same. Whether a car is five years old or twelve, the difference in taxation is minimal, just a few percentage points of excise or age surcharge. On top of that, import duties and VAT can push total tax costs to as high as 60 percent of a car’s value.

That means a young professional trying to import a five-year-old Toyota Axio, a safe, efficient car, faces almost the same tax burden as someone importing a fifteen-year-old fuel-guzzler. Guess which car people end up buying?

We have trapped ordinary Tanzanians in a vicious cycle: they can’t afford newer cars because taxes are too high, and they buy older ones that pollute, break down, and eventually cost them more in maintenance and fuel.

The smarter policy, 20 percent duty on newer cars

A rational fix would be to reduce import duty to 20 percent on cars five years old or newer, while imposing steep surcharges on vehicles older than that. For example:

• Cars aged 6–8 years could face an extra 15 percent tax.
• Those 9–10 years old, a 30 percent surcharge.
• Over 10 years, a 60 percent surcharge plus an environmental levy.

This reform rewards buyers who choose safer, more efficient vehicles, without cutting overall revenue. How? Because TRA would make up for lower taxes on newer cars through higher surcharges on older ones, better enforcement, and higher compliance.

In 2023 alone, Tanzania imported around USD 391 million worth of passenger vehicles, mostly used. Even a small shift toward younger imports could raise tax revenue by an estimated USD 27 million annually, thanks to higher CIF (cost, insurance, freight) values of newer cars and improved VAT collection.

How Tanzania can gain, fiscally and socially

1. Healthier cities:

Dar es Salaam’s air is choked by old diesel engines and poorly maintained vehicles. Encouraging newer imports cuts particulate emissions, improving air quality and reducing hospital admissions for respiratory diseases.

2. Safer roads:

Cars manufactured within the past five years have airbags, ABS brakes, and better crash resistance. The government saves on medical and social costs tied to traffic accidents.

3. Stronger economy:

A modern car fleet stimulates Tanzania’s formal economy, insurance, banking, car servicing, spare parts, and inspection services all grow. These sectors are taxable, which means TRA benefits in the long run.

4. Green financing opportunities:

If structured correctly, this reform aligns with Tanzania’s climate commitments. Donors and climate funds could co-finance the rollout of emissions testing centers or roadworthiness programs, turning a tax reform into a sustainability win.

The trade-off that makes sense

Critics will ask: won’t lowering the tax rate on newer cars cut government income? The answer is no, not if the reform is designed intelligently.

The key lies in mix and compliance.

When newer, higher-value cars become affordable, importers bring in fewer junk cars but more modern ones with higher declared CIF values. Those cars attract VAT, excise, registration fees, and spur legitimate aftermarket business. Combine that with digital valuation tools and tighter port inspections, and TRA’s collection efficiency actually improves.

So instead of chasing every shilling through punitive taxes that shrink the market, TRA can collect more by expanding a healthier, compliant market.

The bigger picture, taxing for progress

Tax policy is not just about raising money; it’s about shaping behavior. Just like excise duty discourages smoking, import duty should discourage pollution, road accidents, and inefficiency. Tanzania’s current car tax system does the opposite.

A 20 percent import duty for newer vehicles is not a subsidy, it’s a structural correction. It aligns fiscal goals with public welfare and environmental sanity. It helps ordinary citizens own safer vehicles, improves productivity, and modernizes Tanzania’s transport economy.

Final word: TRA must lead, not follow

Tanzania stands at a crossroads. The global shift toward greener, safer transport is accelerating, and our tax system must catch up. Lowering import duty on five-year-old cars while taxing aging imports more heavily is not just about cars — it’s about building a fairer, cleaner, and more competitive economy.

The question is not whether we can afford to change this policy.

It’s whether we can afford not to.