The official opposition in Parliament has said it plans to focus on tax exemption, cutting it down from 3 to 1 percent of the country’s Gross Domestic Product (GDP) when it tables its parallel budget in the National Assembly next week.
According to a press statement issued by the Shadow Finance minister, Zitto Kabwe, yesterday, the value of accumulative tax exemptions currently stands at 1.3trn/-, equivalent to the total aid the country receives from development partners.
“Our 2012/13 alternative budget would focus on tax relief cuts, which are offered to various companies and individual organisations.
The move is aimed at saving a substantial amount of money which would be allocated to other development projects. The amount is equal to the total aid of 1.3trn/- (3 percent of the GDP) Tanzania receives from the donors,” he said.
According to him, the second priority was directing the country’s financial resources into rural development, especially in building infrastructure such as roads and rural electrification. The move will go along with rehabilitating the central railway as well as rebuilding the Tanga-Moshi-Arusha railway.
The statement further explained that other priorities would be to extend the skills development levy, obliging all employers including the government and public corporations to pay.
At least one-third of the duty should be directed to the Vocational Education Training Authority (VETA) and other technical colleges while the remainder should be routed to the Higher Education Students Loans’ Board (HESLB).
According to Zitto, his budget would instigate the government to reduce the Pay As You Earn (PAYE) tax to 9 percent. Such reduction would help the common man to keep some money to fight against poverty.
The shadow budget would also strive to increase domestic revenue to 20 percent of the GDP, a move that would enable Tanzania Revenue Authority (TRA) to collect more tax, particularly from telecommunication companies as well as firms dealing with mining, oil and gas exploitation.
The alternative budget would also chart out a strategy for the country to use more gas in its economic activities, while temporarily removing taxes on all consumer goods, so as to control the rising inflation.
Another priority would be the installation of a new education system that would enable the private sector to provide the better education as well as introduce a regulatory body for the sector. In his statement the shadow minister said that, his budget would prioritise tax relief to industrial entities that use the country’s raw materials originating from agriculture such as cashewnut, cotton, and sisal.
Kabwe questioned the increase of the government budget from 13trn/- in year 2011/12 financial year to 15trn/- 2012/2013 wondering from where the government would get the money while the national debt has increased to 22trn/-.“We applaud the finance minister as a person who listens to advice. We have been with him since last week, we hope he will work on these areas.”
The opposition camp applauded Tanzania Regulatory Authority (TRA) for collecting 691bn/- in revenues per month, something which has never been achieved before, adding that the aim is to get 1trn/- per month.
On Tuesday government unveiled its proposed 2012/2013 budget of over 15trn/- of which 4.5trn/- is to be directed to capital investments.