How the approved Budget will affect Tanzanians

By Alex Nelson Malanga

 Business journalist

Summary

·         The cost of cement and fuel were among issues that took centre stage when Parliament debated the Sh44.4 trillion Budget, which was presented on June 15

Dar es Salaam. You will pay Sh1,000 more for a 50-kilogramme bag of cement starting this Saturday, while a litre of diesel and petrol will cost you Sh100 more.

This is after the government defended all its proposals in the 2023/24 Budget, which Parliament passed yesterday after several days of debate.

The cost of cement and fuel were among issues that took centre stage when Parliament debated the Sh44.4 trillion Budget, which was presented on June 15.

Parliament’s endorsement of the Budget means that unless the Finance Bill is amended, the provisions will become part of the Finance Act, 2023 and thus be legally binding with effect from July 1, 2023.

Presenting the Budget earlier this month, Finance and Planning minister Mwigulu Nchemba proposed the introduction of an excise duty of Sh20 on every kilogramme of imported and locally manufactured cement.

As part of efforts to speed up the implementation of strategic projects, Dr Nchemba also proposed the amendment of the Roads and Fuel Toll Act, CAP 220 with a view to increasing the Road and Fuel Tolls by Sh100 per litre of petrol and diesel.

But soma MPs argued when debating the Budget that the move would be counterproductive.

Mr Mrisho Gambo (Arusha Urban-CCM) was among those who opposed the decision to charge an additional Sh100 on every litre of petrol and diesel.

He said 22 taxes, levies and fees were already being levied on fuel.

“When Sh100 is added, it is the final consumer who will bear the burden. What the operators of commuter and upcountry buses will do is just to transfer the additional costs to passengers,” cautioned Mr Gambo.

“Let us be creative in seeking new sources of revenue instead of focusing on the areas that directly hurt ordinary citizens.”

On cement, Mr Gambo said the additional duty on would push up construction costs.

“The government needs to go back to the drawing,” he said.

Mr Venant Protas (Igalula-CCM) aired similar sentiments.

“The additional cost on cement is of no help to our citizens, most of whom are low-income earners.

“The government should look at other ways of increasing revenue. In fact, essential items like food and cement should enjoy tax relief, Mr Protas said.”

But responding to the concerns in Parliament yesterday, Dr Nchemba said in the course of bringing about development, it was inevitable that some people would have to bear the burden.

He said the government’s intention was to build a prosperous Tanzania.

On the issue of additional cost on cement, Dr Nchemba wondered where the government would get the money required to take Tanzanians to tertiary colleges.

The government has abolished tuition fees for Form Four leavers selected to join vocational training colleges.

The institutions include the Dar es Salaam Institute of Technology (DIT), Mbeya University of Science and Technology (MUST) and Arusha Technical College (ATC), which offer national priority courses.

This initiative aims to increase the number of experts required for the Fourth Industrial Revolution.

“We want to serve our citizens better and that is why we deem it logical to take Sh20 from those who are better off so that we can enhance free education in tertiary colleges,” said Dr Nchemba.

“We must help each other. Of course it might increase your costs, but there is no any other option. We need to take good care of the children of Tanzania.”

On the additional Sh100 on fuel, Dr Nchemba asked Tanzanians not to be worried and that the government would always be there for them.

“There was a time when prices soared, not because of the additional Sh100, but due to external factors. The government stepped in by providing subsidies. Why should you worry today? What is wrong with charging an extra Sh100 on every litre of fuel and channel the money into strategic projects at a time when fuel prices in the global market are low?”

Other items whose prices could potentially rise starting Saturday include beer and tobacco products, as well as cigars, cheroots, cigarillos and cigarettes.

The government had proposed an excise duty rate of 20 percent on beer and tobacco products.

The government also had proposed the introduction of excise duty at the rate of 30 percent on other cigars, cheroots, cigarillos and cigarettes.

Responding to MPs who were complaining over high tax rates, Dr Nchemba urged them to convince their voters to be compliant when it came to tax.

This, he explained, will widen the tax base and eventually put the government in a position to cut tax rates.

Today, he said, tax rates were high due to the fact that taxpayers were few.

Available data show that in the 2021/22 financial year, for-instance, there were 4.5 million registered taxpayers and out of which only 1.6 million had business Taxpayer Identification Number (Tin).

“We need money for development projects and social services. But it is a few taxpayers who bear the burden,” said Dr Nchemba.

However, he said, if everyone would use Electronic Fiscal Devices (EFDs), issue receipts and a customer demand for receipts, it would be the beginning of the journey for tax cut.

“Today every trader sees the tax rates as high. But this vicious circle will be cut if everyone pays tax,” said Dr Nchemba.

He said the government was going to implement in a full swing, the blueprint for regulatory reforms meant to create an enabling business environment

“We consider the private sector as the government’s partner and not an enemy. With this approach, we believe it will stimulate investment and broaden the tax base,” said the minister.

On the complaint about duty remission on imported wheat from 35 percent to 10 percent on the grounds that it will encourage imports than local production, Dr Nchemba said that was not the way it was viewed by MPs.

“This duty remission will be applied to importers who import to fill the deficit gap. It will be applied to the ones who buy wheat in the country but need more than what is available,” he clarified.

Official data have it that demand for wheat in the country is one million metric tons.

However, the local production accounts for only 20 percent of the figure.

Like the government has been doing in importing sugar to fill the gap between supply and demand in the country, Dr Nchemba said at a time of deficit, producers or importers will always get relief.

“We have not reduced the rate to discourage local manufacturers and encourage imports. The one who does not buy from local producers first, will not benefit from the duty remission”

The process, he said, will be coordinated by the ministry of Agriculture.

On the other hand, debating the high costs of cooking oil, MPs urged the government to go back to the drawing board and come up with a solution to a problem.

Mr Stanslaus Nyongo (East Maswa-CCM), said the government needed to look at the best way to handle the matter so that Tanzanians could not feel the pinch of high prices.

“We all know that the cooking oil crisis trickles down to ordinary citizens. We need to address this challenge,” recommended Mr Nyongo.

Going by official data, demand for cooking oil in the country is 680,000 tons against the production capacity of 300,000 tons.

This suggests that the deficit needs to be imported.

In a swift rejoinder, Dr Nchemba said the government had resolved to bring a relief to local producers so that they could up production and avoid the local market being flooded by foreign goods.

“The relief is included in the schedule of amendments that will be tabled here later on,” said Dr Nchemba.

He also expressed the government’s commitment to sealing all loopholes for smuggled cooking oil that were flooding in the local market and thus causing unfair playing ground.

“We will have a meeting with producers and security organs to ensure that this problem is contained,” said Dr Nchemba.

In a nutshell, a total of 374 MPs voted during the Budget approval process yesterday, according to National Assembly Speaker Tulia Ackson, who read out the results.

"This is equal to 95 percent of all votes cast by members of parliament," sai Dr Ackson. Out of the number, 20 abstained while the remaining voted in favour of the revenue and expenditure plan.