Dodoma. How will the government fund its Sh33 trillion Budget? Finance and Planning minister Philip Mpango will answer this important question when he tables the 2019/20 revenue and expenditure plan in Parliament today.
Analysts expect he will come up with a revenue and expenditure plan that stimulates production and one that treads cautiously on tax increases.
While hailing a number of measures that the government was undertaking to improve the infrastructure (railway, roads, airports, seaports and electricity generation capacity), which is key in the improvement of the business environment, analysts were also not short of issues that need special consideration in Dr Mpango’s 2019/20 budget.
“My expectation is that the government will come up with a budget that stimulates production. It is when productivity improves that Tanzania Revenue Authority (TRA) will be able to collect much more in a number of domestic tax categories like Pay As You Earn, Skills Development Levy, Excise Duty and Value Added Tax (VAT),” said Nzega Urban Member of Parliament Hussein Bashe (CCM).
The 2019/20 will be the ninth in a series of annual development plans since Tanzania adopted the strategy of measuring the country’s development on the Five-Year Development Plans (FYDP) basis.
The 2nd FYDP, which runs from financial year 2016/17 to 2020/21, puts emphasis on industrialisation as a means of elevating Tanzania into the middle income economy come 2025.
“What this means is that we need a budget that stimulates production. We need a budget that emphasizes on making sure that people are able to get disposable incomes so they can buy what is produced,” said Mr Charles Mwijage (Muleba North - CCM).
Mr Mwijage, who served as Industry, Trade and Investment minister during the first three years of President John Magufuli’s administration, said much as TRA needs to collect tax, nurturing growth of production across all sectors is the best way to grow future revenues. The views by MPs seem to concur with what traders told President Magufuli at a State House meeting last week.
Hundreds of traders spent more than 10 hours at the meeting pouring their hearts out over the difficulties in doing business, ranging from unfair taxation, harassment by security and regulatory agencies, bureaucracy and corruption.
President Magufuli’s reaction was immediate. He removed Charles Kicheere from the position of TRA’s Commissioner General to Njombe Regional Administrative Secretary (RAS).
The President also fired Industry and Trade minister Joseph Kakunda replacing him with Mr Innocent Bashungwa.
Ms Magdalena Sakaya (Kaliua - CUF), Rashid Shangazi (Mlalo - CCM) and Dr Raphael Chegeni (Busega - CCM) said they would be happy if Dr Mpango comes up with a revenue and expenditure plan that stimulates production, with a specific focus on areas that employ a majority of the country’s working class population.
“My expectation is that the budget will create an enabling environment for businesses to thrive. That way, they will be able to pay tax,” said Dr Chegeni.
Ms Sakaya said: “Considerable effort should be directed towards boosting the agricultural sector. This should involve access to farm inputs and getting the markets, among others”.
And Mr Shangazi said: “The private sector needs special impetus. We need to come up with measures that will stimulate large scale investment in the agricultural sector. That way, we will get enough raw materials to be used in the manufacturing sector.”
Like politicians, manufacturers are also of the view that Dr Mpango will today unveil a budget that will do away with some of the taxes that they considered as being a burden.
Refunds for VAT and additional import duty on industrial sugar rank high on issues that manufacturers would want to be addressed. Grouped under its apex body, the Confederation of Tanzania Industries (CTI), manufacturers say the government holds over Sh90 billion in refundable import duty and outstanding VAT claims.
Similar views are aired by the Tanzania Private Sector Foundation (TPSF), which believes there were a number of taxes that inhibited the productive sectors.