MPs want predictable, credible tax system

Dar es Salaam. A section of lawmakers are calling for the government to mend its way of doing business to ensure a predictable, efficient, fair and credible tax system that would boost investor confidence. But some commended President John Magufuli’s administration for the fiscal and monetary policy measures it has been taking to improve the business environment.

The lawmakers were debating the Sh34.88 trillion budget estimates for the next financial year, which kicks off on July 1, 2020.

Vunjo MP James Mbatia (NCCR Mageuzi) said the current complicated tax system was a hindrance to growth of business and investment.

He expressed the need for strengthening and increasing the effectiveness of the tax system to unleash much-needed domestic resources to meet the global Sustainable Development Goals (SDGs).

Domestic resource mobilisation presents a particular challenge for developing countries, which struggle to raise sufficient revenue to provide basic services, such as road infrastructure, healthcare, education and public safety.

Mr Mbatia said the government needs to pay greater attention to the spill overs from tax policies and step up support for stronger tax systems.

“Regardless of our political differences, we need to work together in creating friendly environments for shaping our economy which has been ravaged by the Covid-19 pandemic,” he said.

“In any war, we need to speak the same language. We need to be proactive and not reactive in dealing with this pandemic issue.

“Great minds discuss issues, ordinary minds discuss events but simple minds discuss ideas.”

Citing an example of the tourism sector which contributes 25 percent of the country’s foreign currency, Mr Mbatia said over 1 million jobs were at risk due to the Covid-19 crisis, whose first case in Tanzania was confirmed in mid-March.

The reality remains to be: the world has not obtained an answer for fighting against the Covid-19, and so halting tourism, while slumping exports of manufacturing and agricultural goods.

Mpendae legislator on CCM ticket Salmin Turki (Zanzibar Islands) decried unfriendly business environment when it comes to trade between Tanzania Mainland and Zanzibar .

He said it was unfair for traders from Zanzibar or Mainland to pay Value Added Tax (VAT) on consignments from either part which have already been paid for by the importer.

“This hurts investors as it adds unnecessary operational costs as well as raising the cost of living,” said Mr Turki, calling on the government to scrap VAT on consignments from either part of the Union.

Citing an example of the government’s decision to scrap about 60 levies and fees, Muheza lawmaker Adadi Rajabu (CCM) commended the government for its efforts in improving the business environment.

However, he said more should be done in creating a conducive business climate for the private sector to move to the next level.

“Private sector is pivotal for the development of the country. We need to trade with them and not hurt them,” said Ambassador Rajabu. Simanjiro MP James Millya (CCM) echoed his sentiments, saying the private sector was a heart for the country’s development.

He expressed his trust in the government for being quick in addressing challenges that investors are grappling with.

Mr Millya commended Finance and Planning minister Philip Mpango, for promising him that the government would next week meet with Mirelani-based small scale miners to discuss their tax challenges and way forward.

“The minister [Dr Mpango] has said there is a need to look at ways to help the private sector so that we can create a number of billionaires, this is very encouraging,” he asserted.

Thursday’s budget was well received and well supported by many groups across the business sector, including the Tanzania Private Sector Foundation (TPSF) and Tanzania Chamber of Commerce, Industry and Agriculture (TCCIA).

They commended the government for putting in place comprehensive economic response strategies to support businesses and other economic activities which have been disrupted by the Covid-19 pandemic.