Tanzania MPs, manufacturers laud Budget’s vision, propose recommendations

Dar es Salaam. As Tanzania’s national budget for the 2025/26 fiscal year takes centre stage in Parliament, a comprehensive dialogue is unfolding, blending strong endorsements from industrial bodies with detailed recommendations and critical concerns voiced by Members of Parliament (MPs).

On Monday June 16, 2025, the Confederation of Tanzania Industries (CTI) extended high praise for the government’s proposed 2025/26 budget, commending it as “balanced and forward-looking.”

Notably, CTI’s First vice chairperson, Mr Hussein Sufiani, revealed that a significant 56 out of their 70 proposals were successfully incorporated, signalling a strong collaborative approach.

“This budget strikes a crucial balance between enhancing domestic revenue mobilisation and implementing key growth-stimulating measures,” Mr Sufiani said.

The 2025/26 national budget totals Sh56.49 trillion, representing a 12.3 percent increase from the previous year’s Sh50.29 trillion.

Of this amount, 31 percent is allocated to development expenditures, while recurrent costs account for 69 percent.

Domestic revenue collection is projected to reach Sh40.46 trillion, a substantial 16.9 percent rise, highlighting the government’s commitment to internally financing its development priorities, in line with the East African Community’s budget theme.

Mr Sufiani noted that the budget introduces key tax reforms and legislative amendments designed to protect and strengthen local industries, boost domestic production capacity, enhance competitiveness in local, regional, and international markets, promote local value addition, reduce import dependence, encourage industrial growth and employment, and stabilise prices amid inflationary pressures. 

Significant tax measures include amendments to the Budget Act (CAP 439) and the Public Finance Act (CAP 348), which mandate that all ministries, agencies, and local government authorities consult with the finance minister before introducing or revising any levies or fees.

This aims to prevent overlapping charges and revenue duplication. Additionally, the removal of licensing fees (Sh300,000) for manufacturers and importers of excisable goods marks a major step towards lowering operational costs and fostering a more business-friendly environment.

From the parliamentary side, chairperson of the Parliamentary Budget Committee Mr Oran Njeza outlined a series of critical recommendations focusing on fiscal prudence and strategic growth.

He underscored the imperative to improve taxation, particularly by boosting the contribution from Small and Medium Enterprises (SMEs).

Citing TCCIA data, he noted that while SMEs account for 95 percent of businesses and 35 percent of GDP, their tax contribution is only around 20 percent. 

Mr Njeza stressed the need for this to go hand-in-hand with improving the business environment and reducing regulatory burdens, advocating for a review of tax payment procedures to encourage voluntary tax compliance.

On government debt, despite positive international ratings, Mr Njeza’s committee advised exploring innovative financing sources like municipal and infrastructure bonds to reduce reliance on unpredictable and costly external loans.

He also recommended diversifying borrowing into multiple currencies to mitigate exchange rate risks and enhance the government’s capacity to finance development projects internally.  Individual MPs brought their unique perspectives to the debate, adding depth to the budget discourse.

Dr Charles Kimei (Vunjo - CCM) raised significant concerns about the proposed 10 percent withholding tax on retained earnings.

He argued passionately that these funds are essential for banks’ organic capital growth and long-term lending.

“What surprises me is that we have introduced a 10 percent tax on retained earnings,” he stated, warning that when combined with the 30 percent corporate tax, it effectively becomes a “40 percent” tax.

He said: “This 40 percent tax is unheard of in the region; our peers in the community have reduced corporate tax, going down to 25 percent or even 15 percent. Therefore, we will completely remove ourselves from investment competition.”

Nominated MP Mr Shamsi Vuai Nahodha strongly advocated for greater investment in research and development (R&D).

He questioned the economic wisdom of relying on foreign expertise for major projects: “Who is implementing major projects?Hiring foreign experts means taking money outside the country.”

He asserted that current funding for education, science, and technology “do not align with the national goal of having a competitive economy,” emphasising: “You cannot build an economy if you haven’t prepared your human resources.”

Prof Sospeter Muhongo (CCM-Musoma Rural) reinforced the call for R&D, proposing that Tanzania allocate “2-3 percent of GDP” to science, technology, and innovation, citing leading countries like Norway (6.6 percent), the UK, and the US (up to 6.1 percent) as benchmarks.

He specifically suggested “1 to 2 percent” for direct investment in innovation and research, noting South Korea’s 4.8 percent and China’s 2.7 percent R&D spending.

Prof Patrick Ndakidemi championed increased budgetary allocation for agriculture, noting that existing modest investments are yielding good results, urging for “sufficient funds.”

He also suggested a reallocation of health funds, proposing “70 percent should go to the UHF [Universal Health Fund] and 30 percent to HIV, because health services benefit a larger population.”

MP Kenneth Nollo focused on practical agricultural modernisation, advocating for a shift away from traditional hand hoes.

He called for attracting an investor to “produce ox-ploughs domestically at an affordable price,” estimating a local price of Sh80,000-100,000 compared to Sh160,000 for imported ones, to significantly boost agricultural productivity.