Opposition, Bunge team call for key budget fixes

Dar es Salaam. The Opposition camp and the Parliamentary Budget Committee have called for some changes in certain aspects of the 2020/21 Budget to help mitigate the effects of the Covid-19 pandemic - and make its implementation more realistic.

On Thursday, Finance and Planning Minister Philip Mpango requested Parliament to endorse a Sh34.88 trillion budget for the next financial year. However, some critics say it is unrealistic.

The Opposition camp yesterday proposed an alternative budget of Sh23.646 trillion, saying it reflects the government’s actual annual revenue collections, which have averaged Sh26.273 trillion for the past four financial years.

The shadow government also proposes that the official budget be cut by 10 percent in order to cope with the Covid-19 which has affected the state of public revenues.

The alternative budget was tabled by Finance and Planning shadow minister Halima Mdee.

“In the situation whereby our economy has been shaken by the Covid-19 pandemic - which caught us unprepared - budget adjustments are inevitable,” stated Ms Mdee who is the Kawe MP on the ticket of the main opposition, party Chadema.

“In so doing, the budget will reflect the current environment where government revenues have dropped - and are forecast to dwindle further if the pandemic persists.”

For its part, the Parliamentary Budget Committee stressed the need for internal reallocations so that the budget would reflect the needs of the people amid the pandemic.

the Committee’s chairman, Mashimba Ndaki, told Parliament that priority should be on healthcare, people’s safety and economic growth.

“This would help us to be realistic in our budget that intends to address the challenges which Tanzanians are grappling with,” noted Mr Ndaki, the Maswa-West MP.

Chadema’s Mdee said if the government were to continue financing social services and fighting Covid-19, it should defer implementation of projects that could wait for future budgets.

“All projects whose implementation can be suspended without having any social and economic adverse impact should wait for a year - and we shift focus on community services that have been hit by the coronavirus outbreak, and which have a direct effect on the people’s day-to-day life,” she said.

Ms Mdee also called on the government to review budget expenditures for some government departments and positions.

This, she said, would help to reduce unnecessary expenditures, and divert the moneys to community services which have largely been hit by the pandemic.

“Although the government insists that the Covid-19 spread has decreased, the doors for economic activities around the globe are still closed because the disease is still raging out there,” said Ms Mdee. “This keeps wreaking havoc with our economy.”

She said the focus of the 2020/21 budget should be on cushioning the economy against ravaging by the pandemic.

If this is to happen, she added, the government should ensure enough liquidity in various economic sectors with a view to increasing the citizens’ purchasing power.

Claiming that past government budgets have invariably been unrealistic, she noted that it has in the past four years been falling short of public revenue collection targets by an average of 20 to 30 percent.

This culminated in the government falling into the trap of embracing commercial loans to cover budget deficits, a trend that escalated the national debt to a whopping Sh55.43 trillion.

“We need a budget that reflects the available sources of revenue and the revenue collection capacity,” said Ms Mdee.

“We also need all government loans from now on to be approved by Parliament so as to avoid meaningless borrowing.”

To stimulate production for a wider economy, Ms Mdee said the Political Opposition also wants the government to pay Sh2.3 trillion in tax refunds it owes businesses.

She said the mostly hit businesses are those registered under the value-added tax (VAT) system like mining, construction and agriculture, as well as foreign companies operating in the country.

Her suggestions were echoed by the Budget Committee’s Ndaki, who said that such payment delays create and exacerbates cash flow problems for manufacturers and investors in other sectors alike.

He said payment of VAT refunds owed to businesses would increase companies’ capital bases, thereby adding value to business operations.

Mr Ndaki also called on the government to consider scrapping VAT on flowers and vegetable packaging materials so as to make them available at affordable prices.

Commending the government’s move to scrap various charges and taxes, Ndaki said credit be given for implementing the Business Blueprint which sets the stage for a raft of amendments to laws and regulations governing the conduct of business in Tanzania.

“We urge the government not to come up with more or new fees and taxes that throttle private sector growth,” Mr Ndaki stated.