By Alex Nelson Malanga & Rosemary Mirondo
Summary
·
The two
institutions applaud the 2023/24 budget, but not in all areas
Dar es Salaam. The Confederation of Tanzania Industries (CTI) and Tanzania Private Sector Foundation (TPSF) cautiously welcomed the 2023/2024 budget yesterday, stating that if properly implemented, it will lead to
an industrial economy.Their views were delivered
separately when Parliament resumed debating the Sh44.4 trillion budget debate
on Monday.
They stated that the budget was
good, but that some areas that appeared to be a threat to businesses should be
addressed in order to boost local investment.
Tabling the 2023/24 fiscal year budget
last Thursday, the Finance and Planning minister, Dr Mwigulu Nchemba, proposed
an increase of 20 percent excise duty on beer and tobacco products.
He also proposed introduction of
excise duty at the rate of Sh20 per kilogram of imported and domestically-manufactured
cements, something that will likely increase production costs and so
construction costs.
The minister also proposed the
reduction of import duty on fabric from 50 percent to 35 percent as well as
introduction of excise duty at the rate of 30 percent on cigars, cheroots,
cigarillos and cigarettes.
CTI vice chairperson Hussein Sufian
said yesterday: “These measures will have a huge negative impact on
manufacturers, which, incidentally, are among the leading firms tax revenue
generation.”
As it happens, he requested the
government to reconsider its measures as it is the final consumer who will bear
the burden. Furthermore, CTI had submitted tax proposals to the government for
the 2023/2024 fiscal year, which have not been included in the budget speech.
Members of CTI requested the
government to reconsider the government’s proposals for growth and prosperity
of the manufacturing sector and the country’s economy at large. One of the
proposals is related to the Mining Act (Cap 123) with the Regulation 2022 GN
No. 574 dated September 23, 2022 that requires a free carried interest of 16
percent in the shareholding of cement, fertilisers, salt and lime manufacturing
companies.
The CTI proposal wanted the
government to exempt these industries from the provision of this Act and
regulations.
Mr Sufian added that finished
products in the steel sector have not been moved to the fourth tariff band (of
35 percent) of the East African Community Common External Tariff 2022 revision,
while other EAC Partner States have already increased duty.
“The imposed 25 percent tariff
discourages local manufacturing and encourages imports,” he said.
“It further makes local producers
less competitive against other EAC producers.” Despite some holes in the
budget, members of CTI are encouraged by government’s commitment to stimulating
economic growth and improving the business environment.
“The government’s commitment is
particularly evident in the budget, with tangible investments and new measures
to promote growth of industries, entrepreneurship and job creation,” he said.
A key highlight of this year’s
budget is the government taking various reforms in the tax structure, fees,
levies and amendment of laws and regulation to improve business environment.
Some reforms that have been proposed
are in the area of Value Added Tax, excise duty, fees and charges of agencies
and also in the import duty.
The proposed tax measures will
enable domestic industries to reduce the cost of production, improve consumer
welfare, promote the use of local materials, enhance competitiveness, and
stimulate economic growth.
TPSF acting executive director
Raphael Maganga described the 2023/24 budget as the budget for the private
sector.
“It is the budget for the private
sector and this could be attested to the government’s efforts in improving
numerous policies with a view to taking the sector to new heights,” says Mr
Maganga in a press release.
“We expect to see increased
efficiencies in local government authorities for the prosperity of the private
sector.”
Given that the Tanzania Revenue
Authority (TRA) is set to garner Sh26.7 trillion in the next financial year,
the huge burden will be borne by the private sector for it is the main
taxpayer.
It is on those grounds that TPSF
calls on the government to keep on improving the business environment, which
create a room for companies to continue paying taxes and generate more jobs.
The government plans to create eight
million jobs between 2020 and 2025 as envisioned in the ruling party, CCM
manifesto will then be realised.
National Bank of Commerce (NBC)
director and head of treasury and markets Peter Nalitolela commended
government’s efforts to create a friendly business environment.
However, he said for Tanzania to win
investors’ confidence, policies predictability and reforms is inevitable.
“Let’s have in place more
attractions to bring in more investment and job creation. Let’s do away with
trade barriers,” he underscored.
Expert in the field of Agricultural
Economics and Agribusiness Owen Nelson called for the government to timely
disburse the funds allocated in the budget.
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