ACT Wazalendo’s Budget proposals

Dar es Salaam. As the debate on the next financial year’s Budget is expected to start in Parliament today, opposition party ACT Wazalendo has proposed areas for improvement as it seeks economic growth and smooth execution of the estimates.

The party leader, Mr Zitto Kabwe, said the government’s Budget tabled last Thursday was not friendly to workers for not relieving them in taxes and that it did not prioritise sectors that stir economic growth and touch lives of more Tanzanians.

“When the finance minister tabled the Budget he mentioned agriculture as the first priority, but the numbers do not show if it’s really a priority. Imagine, agriculture budget is just 0.52 per cent of the total budget. Is this really a priority?” asked Mr Kabwe when presenting his party’s post-budget analysis yesterday. He also said the proposed Treasury Single Account (TSA) which would be used for collection and payment of government funds was a good idea but may affect efficiency of other organisations especially the cereal boards. He proposed it delayed for thorough preparations.

“We are still not aware of the whereabouts of Sh1.5 trillion as reported by the Controller and Auditor General and possibly it was directed to expenditure that was not approved by the Parliament. Putting all funds in this single account is even more dangerous….maybe until 2021,” said Mr Kabwe.

He also said even the current budget is likely to miss revenue targets by 25 per cent as business transactions were declining.

Tax proposals

Mr Kabwe proposed to scrap the value-added tax (VAT) on tourism saying it was slowing growth of the $2 billion sector which is currently the leading foreign exchange earner.

Before introduction of VAT on tourism services, the number of visitors was growing by 12 per cent but after the imposition of the tax the sector grew by just 3 per cent.

Mr Kabwe said the removal of VAT on sanitary towels was a good move, but asked the government to exempt excise duty on the towels and abolish income tax on manufacturers of the products to make them affordable.

The government proposed to reduce the corporate income tax rate from 30 per cent to 20 per cent for new investors in the pharmaceutical and leather industries for five years but Mr Kabwe said the government should also ban exportation of hides and offer tax credit on processed leather as a way of stimulating leather processing.

Mr Kabwe proposed abolishing the 10 per cent excise duty on mobile money transfer and reduces Skills and Development Levy from the current 4.5 per cent to 2 per cent.

He also proposed increasing taxable slary threshold from the current Sh190,000 to at least Sh360,000 and social security contributions reduced from the current 20 per cent to 12 per cent.

The government tabled its budget estimated at Sh32.5 trillion with domestic resources amounting to Sh23.6 trillion for 2018/19.