Business: It’s a relief budget for all

Dar es Salaam. The Tanzanian business community yesterday welcomed the 2021/22 national budget, saying that, if it is well implemented, it would go a long way in stimulating economic growth across all sectors.

Finance and Economic Planning minister Mwigulu Nchemba on Thursday tabled the Sh36.3 trillion estimates before Parliament, with a bundle of fiscal measures that business associations say contain promising prospects.

Speaking in separate interviews with The Citizen, Confederation of Tanzania Industries (CTI) Policy specialist Frank Dafa said the budget generally brought relief to the manufacturing sector and the move could boost investment and increase job opportunities.

“There are significant improvements in the taxes and levies of employers and manufacturers. So the relief provided will stimulate industrial growth,” said Mr Dafa, adding that the abolition of the 15 percent additional import duty on industrial sugar was commendable. The local manufacturers have been complaining about the requirement which left their billions of shillings in the hands of the government due to delayed refunds.

Calling for its removal, Dr Nchemba said the move would promote competitiveness and increase liquidity of domestic industries.

“Cutting tax on beer produced from barley and the non-increase in taxes on many other products coincides with the reduction in the tax on posters which was still very low compared to the people’s expectations; but it would still go a long way for the prosperity of various businesses,” said Mr Dafa.

Tanzania Bankers Association (TBA) chairman Abdulmajid Nsekela echoed the sentiments, saying that it was a relief budget.

He said if the budget would be implemented accordingly it would create conducive environment for business translating into more opportunities for banks to finance the businesses.

“This budget has revoked unproductive taxes and this is a good thing,” said Mr Nsekela.

According to him, the budget has also created new sources that aim to improve lives of Tanzanians, for example the fuel toll of Sh100 will help to improve rural roads.

“Also large projects will continue to be worked on and thus continue to boost the economy. In short it will touch many sectors including agriculture, water and many more sectors,” he said.

Tanzania Private Sector Foundation (TPSF) Policy, Research and Advocacy director Andrew Mahiga was also of the same opinion that the budget will cater across all sectors.

He said the private sector was happy with the skills development levy because it would reduce the burden of both employers and employees.

However, he said they were advocating for reduction of the the value-added-tax (VAT) rate from the current 18 percent to 15 or 16 percent.

He noted that the tourism sector also needed support to recover from Covid-19 impact, especially the private players.

On the mobile money and simcard taxes, he said the charges involved will affect money circulation as well as reduce the use of the services and ultimately affect the economy.

For his part, the chairman of the Tanzania Business Community, Mr Silver Kiondo, said the budget has been well received because it has looked at both sides and even the common man who are the taxpayers.

“We feel that there is light coming after facing hardships including importers of vitenge (special fabrics) who had to incur a huge burden in tax,” he said.

CEO Roundtable chairman Sanjay Rughani said the private sector was all set to move to more deliberate connected collaboration and execution to achieve the budget priorities and Tanzania’s five-year development goals.

“Driving medium to long term sustainability, creating a conducive atmosphere for businesses and thereby signalling stronger private sector participation plus focusing on - infrastructure, agriculture, industry, entrepreneurial support, revenue mobilisation, driving social impact and protecting the public purse was the underlying message from the 2021/22 budget. This is promising to drive economic growth and prosperity,” he said.

According to him, the banking sector was also excited with the government’s firm intentions and commitment to finalize the process of achieving a sovereign credit rating.

“This enables us to tap further on international markets to achieve diverse and quality financing for viable national projects and priorities through issuance of different sovereign papers and solutions,” he said.

“As the budget is debated, a deeper look on the impact from the newly introduced taxes on mobile money transactions plus daily levy on SIM card is necessary as it can constrain the financial inclusion agenda and can have other implications,” he added.