The Role of Electronic Tax Stamps in Collection of Excise Duty in Tanzania

ABSTRACT: This study investigates the role of Electronic Tax Stamps (ETS) in enhancing the collection of excise duty in Tanzania. Introduced in 2018, ETS was designed as a transformative tax administration reform aimed at improving the traceability, monitoring, and authentication of excisable goods such as alcohol, tobacco, and soft drinks. The Tanzanian government implemented this digital system to address challenges associated with underreporting, counterfeit production, and tax evasion that had long undermined the efficiency of excise duty collection. Drawing inspiration from global best practices, where countries like Mexico, the United States, and South Africa have used similar technologies to improve tax compliance and revenue performance, Tanzania adopted ETS as part of its broader strategy to strengthen public finance management. The system allows real-time tracking of excisable goods throughout the supply chain, promoting transparency, accountability, and improved reporting accuracy. Early results from the Tanzania Revenue Authority (TRA) indicate that excise revenue has significantly increased since ETS implementation, confirming its potential to enhance domestic resource mobilization. This study employs a time-series quantitative approach, using excise duty data from 2011/12 to 2023/24 to assess the impact of ETS. Regression analysis was conducted to compare pre- and post-implementation revenue trends, with findings showing a statistically significant increase of approximately TZS 435.72 billion in annual excise collections after ETS adoption. These results affirm the system’s effectiveness in supporting compliance and addressing inefficiencies in traditional tax collection methods. The study concludes that ETS plays a critical role in modernizing Tanzania’s tax administration, improving excise revenue performance, and fostering a more transparent and efficient fiscal system. It recommends further expansion of the ETS system, increased stakeholder engagement, and investment in digital infrastructure to sustain and amplify its long-term benefits