Dissertation
The booming of forestry sector in the country in recent years has seen resources depleting
at an increasing rate over time due to the supply gap of about 42.8 million m 3 of wood.
Initiatives including fiscal measures such as forestry taxation and fee imposition are
employed to ensure their regulation. Forest taxes and fees have impacts in the forestry
sector development; However, no actual study was conducted on their actual implications.
This study analyses the implications of forest taxes and fees at both micro and macro level
of the forestry sector. For micro level, the study focused on the smallholder forestry
farmers sawn timber value chain (SFFSTVC) in Mufindi district, whereby forms of and
influence of forest taxes and fees on the incentive of the actors to continue with forestry
businesses were analysed, their implication on the income of the actors in the value chain
was identified, and for macro level, the long-run relationship of forest taxes and GDP was
analysed. Proportionate stratified sampling method identified a sample of 267 respondents
for the micro level of the study. Questionnaires, key informant interviews, FGD and
observation were used in data collection; macro-economic data was obtained from
relevant institutions. Quantitative data was analysed with aid of SPSS, MS Excel and R
softwares. Results show that the actors in the SFFSTVC are liable to few taxes and fees
and their compliance is low due to poor enforcement of the agencies, also 64% of all
respondents are willing to continue with business despite the taxes and fees, and that the
taxes and fees on the value chain to be on average of 15% of their total revenue. In macro
level, forest taxes were found to have a bi-directional granger causality and long run
equilibrium. Finally, forest taxes and fees have an observable implication, the study
recommends that nation’s forestry taxation policies to be improved by the MoFP to
stimulate investment in the forestry sector so as to ensure sustainable supply of the
forestry resources.
Wood-Cluster project under the German Federal Ministry of Education and Research