Tax exemptions top Sh1.8 trillion

Mr Ludovick Utouh

Peter Nyanje and Veneranda Sumila
The Citizen Reporters
Dodoma. Tax exemptions totalled Sh1.8 trillion in the 2011/12 financial year, reports by the Controller and Auditor General (CAG) tabled in Parliament yesterday have revealed.

 

This is an increase of Sh800 billion on the 2010/11 amount.The sum waived in 2011/12 is roughly ten per cent of the government’s tentative 2013/14 budget.

The amount could meet the cost of constructing 700 kilometres of tarmac road, roughly the distance between Dar es Salaam and Singida. The exemptions are equivalent to 27 per cent or nearly third of all government revenue collections in that financial year.

 

The amount, according to Mr Ludovick Utouh, has increased from 18 per cent in the financial year 2010/11 when the government tax exemptions totalled Sh1 trillion.

This trend is also worrying the CAG who said yesterday that he has sought and got approval from the government to conduct special audit on exemptions starting from the next audit.“Effective this year, I will conduct special audit on exemptions because this increasing trend needs to be checked,” said Mr Utouh.

However, he noted that exemptions were not a problem, but it was important to ensure that they benefit the country and its economy.

According to the annual general report of the CAG on the financial statements of the central government for the year which ended June 30, last year, the Tanzania Revenue Authority (TRA) reported tax exemptions amounting to more than Sh1.806 trillion granted to various institutions. Mr Utouh notes in the report that had the Sh1.806 trillion exemptions been collected by the government, its total revenue collections would have been Sh8.509 trillion, instead of Sh6.703 trillion in the 2011/12 financial year.

“My proposal to audit the exemptions aims to ensure that the exemptions benefit the nation... if someone receives exemptions to import fuel for power production, we should ascertain that the fuel was used for that purpose,” he said.

Addressing a press conference here, Mr Utouh suggested to the government that in order to check the exemptions there was a need to increase transparency in the mining sector.

He proposed that for the benefit of the nation and its people, mining contracts should be debated by a parliamentary committee dealing with mining issues, which would advise the government accordingly before contracts are signed.

Despite setbacks, the CAG said that there was remarkable improvement in financial management, save a few incidents of massive misappropriation of public resources.

Briefing reporters after the reports were officially tabled in the Parliament, Mr Utouh, said that though incidents of embezzlement were still rampant, public officials have been efficient in keeping their books of accounts.

“There is improvement in the central government as well as local governments, though incidents of misuse and misappropriation of public funds are still a problem,” he said. He attributed the improvement to a number of factors, including a move by the government to implement suggestions and proposals which his office had been making each year.

He also credited the improvement to relentless close follow up by oversight parliamentary committees namely, the Public Accounts Committee (Pac), Local Authorities Accounts Committee (Laac) and the defunct Public Organisations Accounts Committee (Poac).

“I want to urge the government to speed up implementation of proposals we are making,” he said, noting that doing so would further improve the situation

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Among other issues, in the CAG audit reports for the year which ended on June 30, 2012, no public entity in the central government which got qualified opinion. Mr Utouh said also that entities which got unqualified opinion increased from 69, equivalent to 85 per cent, during the previous year to 108 or 98 per cent last financial year.

In local governments, the CAG noted that the number of authorities which received unqualified statements increased from 72 in 2010/11 to 104 in 2011/12, denoting 78 per cent improvement.

On the other hand, authorities which received qualified opinion decreased from 56 to 29 under the same period, equivalent to 21 per cent drop.Meanwhile, Mr Utouh has expressed his discontent and worries over the move by Parliament to abolish a parliamentary committee, Poac, and merger its responsibilities with another House committee, Pac.

Speaking here yesterday after his annual audit reports were formally tabled in the House, he said that the decision would have adverse effects on the financial management in many entities in the country.

“It is very unfortunate that Paoc has been abolished... it is unfortunate because the purposes of its formation several years ago are much more valid today than they were before,” he said.

Reported by Peter Nyanje and Veneranda Sumila

Defending his position, Mr Utouh said the number of public oganisations have been increasing amid escalating embezzlement of public resources, making the importance of the committee even more relevant today.
He also noted that merging of Pac and Poac was not a sound decision because even before the merger, Pac was already overwhelmed.

“The trend shows that Pac hardly fulfiled its obligations each year... now that we have added public organisations to it, I think it needs miracles to work effectively,” he said.