Tanzania Bus Owners Decry 0.5% Ticket Tax, Warn of Operational Strain and Potential Strike

By Adonis Byemelwa

long-distance bus owners in Dar es Salaam are up in arms over a 0.5% tax imposed by the Land Transport Regulatory Authority (Latra) on online tickets. They argue this levy is crippling their businesses, compounding operational challenges and threatening their viability.

Under Regulation No. 35 of the 2020 Passenger Bus Transport Control Act, Latra requires service providers to pay at least 1% of their gross income as a tax. To encourage private sector investment, the government in 2021 reduced the tax to 0.5%, which is to be charged on each ticket issued to passengers.

Transporters and related associations are opposing the direct deduction of this tax from tickets. They suggest incorporating this amount into business licenses to ease operational costs, as they already incur expenses for parking and station fees.

On May 6, 2024, during the budget speech of the Ministry of Transport, Gairo MP Ahmed Shabiby criticized the Sh3,000 tax charged for each online ticket, stating it burdens bus owners. "Now, one passenger is charged Sh3,000 directly on an online ticket, making it seem like the Tanzania Revenue Authority (TRA) is controlling things instead of monitoring people. This is impossible; you must reconsider, especially with the new director, to avoid causing a conflict where bus owners might strike," he said.

However, Latra Director Habibu Suluo, speaking to Pan African Visions, clarified that the actual rate charged per ticket is 0.5% as per Section 35 of the Latra Act. For example, buses traveling from Dar es Salaam to Dodoma with a fare of Sh20,000 are taxed Sh100 per ticket. Similarly, for a fare of Sh40,000, the tax is Sh200; and for a fare of Sh100,000 to Kigoma, the tax is Sh500.

Suluo added that 15% of the funds collected from this tax are remitted to the government, while the remainder supports the institution's operations, including employee salaries.

Mustapha Mwalongo, spokesperson for the Tanzania Bus Owners Association (Taboa), stated that bus owners are not ready to pay this tax and are in discussions to find a solution. "We at Taboa are in discussions with Latra regarding the 0.5% to reach a consensus. They have noticed that many passengers do not buy online tickets but go to the offices and stations to buy them, which is why we are in ongoing meetings to find a solution," he said.

Mwalongo proposed that the 0.5% tax be collected through business licenses. The annual license fees for long-distance buses range from Sh120,000 for ordinary classes to Sh170,000 for luxury classes, including application and schedule fees.

According to Mwalongo, the 0.5% tax for a bus traveling from Dar es Salaam to Mwanza is Sh7,000 per day, totaling Sh210,000 per month. "It will hurt; someone may have 15 or 30 buses in their company, and if you calculate the yearly total, it's a lot of money. Some use online tickets and other buses that do not, which is why they haven't yet felt the pain," he said.

Since last year, four meetings have been held without resolution. Suluo, however, stated that Latra is providing education to transporters on the importance of paying this tax as per the law, rather than holding discussions. "There are no discussions, just continuous education so that when we start taking action and imposing fines, they know we have already informed them," Suluo said. The fine for non-compliance is Sh250,000.

A Pan African Visions investigation in March 2024 at the Magufuli bus terminal revealed that some buses do not use electronic tickets. Ordinary and middle-class bus owners often do not issue electronic tickets, claiming that the machines are broken or that passengers will receive tickets after boarding, which often does not happen. Some passengers board without being directed to their seat numbers.

Taboa Secretary Priscus John explained that many bus owners do not have sufficient budgets to complete journeys if taxed per ticket. "The problem with Latra is that they want to collect the tax for each passenger, but our operating costs are high. We pay taxes at every station we enter, and many do not issue receipts," he said.

Bus operations in developed countries offer insights into overcoming similar challenges faced by Latra. For instance, the UK’s Office of Rail and Road (ORR) engages stakeholders, uses transparent tax collection, and leverages technology for compliance ease. The US Federal Transit Administration (FTA) supports public transport through grants and regulatory oversight, balancing operational costs with infrastructure improvements.

Germany’s Federal Motor Transport Authority (KBA) integrates tax into vehicle registration, simplifying the process for operators. These practices highlight the importance of collaboration, transparency, and technology in creating sustainable and fair transport systems, ensuring regulatory measures support rather than hinder transport businesses.

A bus owner operating between Dar es Salaam and Mtwara, who wished to remain anonymous, said the business is tough to run and emphasized the importance of Latra agreeing to include the tax amount in the business license. "Forcing a tax for each ticket will further hurt our operations; every day, costs keep rising," he said.

Majura Kafumu, Chairman of the Bus Drivers Association (Uwamata), added that they must pay fees every time they drop off passengers. "For example, at the Magufuli terminal, if the bus stays overnight, there is a parking fee and a municipal fee totaling about Sh9,000. In Pwani, it's Sh6,000; Kibaha Sh2,000, and they force entry into Mlandizi for Sh2,000, and in Chalinze, they force entry into the station for Sh2,000," he said.

Kafumu highlighted that in Morogoro, buses are hit with a Sh5,000 charge, split between Sh3,000 at Msamvu Station and Sh2,000 at Mikumi. "Traveling to Dodoma, you face a Sh2,000 fee at each stop in Gairo, Kibaigwa, Bahi, and Manyoni, regardless of whether you have passengers or not," he emphasized.