Focus on 10 key issues as Budget debate winds up

Dar es Salaam. As Parliament winds up debating the Sh41.48 trillion budget for the financial year 2022/23 today, expectations are high that the government will address at least ten issues that defined the deliberations during the past several days.

The issues, raised by Members of Parliament and some analysts outside the august House, include concerns over new tax policies and positive feedback on some of the relief measures to pressing cross-cutting issues like prices of petroleum products.

Fuel, natural gas

To manage the rising fuel prices, which is one of the pressing cross-cutting issues, through the Sh41.48-trillion budget, stakeholders have supported government’s move to establish a Fuel Price Stabilisation Fund (PSF) alongside the ongoing subsidies.

“We are happy that the government has established the PSF. To us this is a good idea because the established fund will help regulate the cost of fuel that has frequently hit the country due to hikes of global prices,” said Mr Raphael Mgaya, the executive director of the Tanzania Association of Oil Marketing Companies (Taomac).

On the other hand, however, the Parliamentary Budget Committee expects the government will ensure that its vehicles are converted to using natural gas so as to cut running costs. Doing so would see fuel costs by government entities going down by up to 50 percent.

Double taxation agreements

In its views, the Parliamentary Budget Committee also urged the government to consider reviewing its Double Taxation Agreements with several foreign countries in a deliberate move to align the agreements with Tanzania’s current development needs and ensure that they [the agreements] do not leave loopholes for tax evasion.

“Although these treaties are beneficial to the country, the challenge we see is that they could be used as conduits for tax evasion whereby a businessman or an investor may use them in an attempt to access indirectly the benefits of a tax agreement between two jurisdictions without being a resident of one of those jurisdictions (treaty shopping), said the chairman of the Committee, Mr Daniel Sillo.

Universal Taxpayer Identification Number (TIN)

Politicians and prominent figures have questioned the rationale behing government plan to link the TIN with the National Identification Card saying the move would automatically revive the unpopular poll tax.

Mr Zitto Kabwe, the leader of ACT-Wazalendo party, noted that there was a need for the minister for Finance and Planning to explain the controversial tax to be imposed on every citizen aged above 18 and holding a national ID.

Insurance, aviation sector

Positive response was received from the insurance sector following government’s proposal to amend the Insurance Act CAP, 394 to expand the scope for mandatory insurance to include public markets, commercial buildings, imported goods, marine vessels, ferries and pontoons.

On the other hand, in the aviation sector, stakeholders raised concerns over the proposed VAT abolishment on air charter services stating that such a move would facilitate the rising costs of air transport and a burden to customers.

This, they say, came whilst some of their other pressing issues had been left pending.

“It is distressing,” Tanzania Air Operators Association (Taoa) executive secretary Lathifa Sykes told The Citizen, stressing that in October last year, they presented their recommendations to responsible ministries, but no single issue had been worked on.

Small scale traders and special groups’ council’s loans

Mr Jerry Silaa, the Ukonga lawmaker urged the government to prepare friendly tax policies for petty traders, extending awareness and re-evaluate the requirement of the electronic fiscal device (EFD) machines which he said was expensive for some to afford.

On the other hand Segerea legislator Bonna Kamoli dived on the discussion regarding the 10 percent loans in empowering university graduates for them to acquire seed capital.

She asked the minister to reconsider these funds because they also used to help youth who were unemployed.

Gadgets tax

On digital devices, stakeholders warned that the proposition to reinstate Value Added Tax (VAT) on gadgets would be a hindrance to the access of affordable digital services which is attributed to access of affordable devices.

Furthermore, as discussed by a notable auditing firm, PwC, the Finance ministry suggestion to reinstate powers to the ministry allowing it to make make regulations for better carrying out of the objects of the principal legislation including regulations to prescribe eligibility, duration and procedure for remission of interest and penalties (“Regulations for remission”), as a move that would create red tape and affect businesses.