TPSF calls for review of MPs pension regulations

 
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By Sturmius Mtweve, Business Week Reporter

Dar es Salaam. The Tanzania Private Sector Foundation (TPSF) has deliberated on the need to review various Acts, regulations, and rules related to pension and provident fund schemes for members of parliament.

This time again, floating concerns over tax exemptions on MPs gratuity schemes; they want it to be subjected to taxation as it has been with other gratuity payments in the country.

The move that has been perceived differently by MPs who are the beneficiaries of the scheme; they want first to know where and how those collections will be used.

Speaking with this paper Deo Filikunjombe an MP from Ludewa constituency said despite the fact that many believe this as a way of revenue collection maximization; there are still queries on how and who benefits from those taxes.

“We need first to close the prevailing corruption loopholes and fund embezzlements as it has been reported from various sectors by the controller auditor general (CAG),” said Filikunjombe

Presenting TPSF tax reform proposal for 2012/2013 fiscal year budget, Placidus Luoga, a consultant with TPSF said for long time MPs have been enjoying income tax exemption on their retirement salaries.

Luoga said the proposal for the imposition of income tax on MPs gratuity aims at bringing equity with other employees in the country –as it has been with other east African member states where MPs have been paying tax on their gratuities.

“There is no equality here! Why should MPs be the target group while there are many government retired officials who the government has and continues spending a lot of money in them after their retirements?,” asked one MP who asked for anonymity in his comments.

He said MPs have do not have pension schemes, when they retire are paid once. But there are those government officials who in their retirements continue receiving 80 per cent of their salaries in which the government is entitled to taking care of them.

The concern of subjecting MPs gratuity to taxation has been in motion since 2009.
Some of the Acts the TPSF proposes for review include the repeal of paragraph 1 (s) of the Second Schedule to the Income Tax Act so as to remove income tax exemption on MPs gratuity.

The private sector has prepared tax reform proposals to be submitted to the Task Force (TF) for consideration for the fiscal year 2012/13, as it has been the case with other years. This encompasses a combination of previous years’ proposals which were not accepted and few fresh proposals.

In 2009 it was learnt that normally, each MP got an untaxed gratuity of at least Sh20million at the end of his/her five-year term in Parliament.

Contacted for comments on the proposed TPSF’s MPs gratuity schemes being subjected to taxation; Stephen Wasira could have no comment on the subject matter.

The proposals presented to the Task Force (TF) on Tax Reforms in 2009/2010 as part of preparations for the 2009/2010 Budget  by the business community  wanted the government to tax the lawmakers’ gratuity but this could not be implemented as is the case with other gratuity payments.

"A gratuity granted to a Member of Parliament at the end of each term should be repealed so that a gratuity granted to a Member of Parliament may also be taxed like it is with other gratuity payments," says part of the report presented in 2009/2010 presented by businesspeople to the TF.