There are three global trends that have a great potential to influence Tanzania's tax system: democratization, aid flows and globalization. The growing democratization has the potential of lowering the level of tax collection for two reasons. On the one hand, more and more taxpayers are becoming reluctant to pay taxes due to low incomes and dissatisfaction with the current level of service provision. On the other hand, political leaders are finding it more difficult to use coercive means to collect taxes in fear of losing their positions, most of which were obtained through the democratic process. However, the democratization process has the different potential of increasing tax revenue collection if it leads to more awareness on the importance of paying taxes by taxpayers and more accountability on the part of leaders. The net effect of these opposing possibilities could be ambiguous and which needs to be investigated. The trend of aid flows presents another area worth investigating. According to the African Development Indicators, aid flows from all donors to Tanzania declined by 28 percent from US$1,343 million in 1992 to US$964 million in 1997.The declining aid flows and the restrictions accompanying them have exerted immense pressure on the tax system to generate funds to on goods that are traded internationally. For a country with a high ratio of export taxes and/or import duties to total tax revenues such as Tanzania, globalization has a potential of decreasing tax revenue collection levels. Paradoxically, however, the available data for Tanzania indicate that since 1993/94 taxes on international trade transactions have been registering positive annual growth rates, and it might be useful to investigate the reason behind such a paradox. Since these forces are possibly operating in opposing directions, it is important for Tanzania to disentangle them in order to determine how it can maximize benefit and/or minimize loss from them. Specifically, Tanzania needs to know the following: Which of these forces are a positive factor in revenue collection in Tanzania, and which ones are not? And, consequent to this, how can the Tanzania's tax system adjust to the changing global situation?