The Tanzania Private Foundation (TPSF) has expressed its dissatisfaction over the 2012/2013 budget which was tabled on Thursday at the National Assembly in Dodoma by the Minister for Finance, Dr. William Mgimwa.
Speaking to journalists here yesterday, TPSF Executive Director Godfrey Simbeye said there are several solid proposals made to the government which were not taken up in the budget plan.
Poor performance of revenue collection by local government authorities (LGAs) which amounted to 200bn/- projected for the end of June this year shows how far the councils were a hurdle to ensuring a conducive business and investment environment in their respective localities.
The private sector believes that business licensing fees should not be regarded as a source of revenue for the LGAs but rather as a tool to facilitate traceability of a business entity, he asserted.
“It is with this spirit the private sector reiterates the role of the government in facilitation of business, including regulatory and policy frameworks whilst the private sector has a role in implementation,” he said.
This year’s budget has shown no clear measures on revenue polices and in particular efforts of widening the tax base by a partial formalization of informal sector trading now added to the taxation system.
“The private sector is of the view that formalization entails the willingness of an entity or individual operating informally to change business operations to a formal practice based on expected benefits,” he pointed out.
Simbeye said much as the government has declared its efforts of strengthening production and services by reviewing domestic industrial incentives on textiles and edible oil, the private sector maintains that there are ‘quick win’ measures which could have resolved the challenges.
Citing an example he said the government could introduce a specific rate of US cent 0.50 per kilogramme on cotton yarn or 10 percent import duty whichever is higher, which would create a level playing field between importers and local producers of yarn.
Furthermore on review of tax rates in the agricultural sector, he said the government was expected to say clearly how that will be undertaken.
“The private sector and other partners have for quite a long time proposed that the produce cess chargeable on agricultural products should be abolished .It is well known that produce cess is a burden to farmers and a stumbling block to farm productivity, profitability and high prices of grain, which in turn leads to worsening inflationary pressures,” he pointed out.
Farmers producing for export markets produce massively, with produce cess affecting their competitive ability in international markets, as farmers in other countries in the region are not exposed to such costs.
On the reform of tax structure fees, levies and other revenue measures, the private sector does not see much change in the skills and development levy (SDL) and motor vehicle licensing.
Simbeye said earlier the private sector had proposed to reduce the SDL from the current 6 percent to either 2 or 4 percent.
Placing the SDL rate at 4 percent would lead to a compliance rate of of 70 percent for SMEs, enabling the government to earn 401bn/- as revenue from the specific category. He also urged the government to involve the private sector more extensively in budget preparations instead of inviting them at a late stage.
Treasury involvement of the private sector in the formulation of tax reform in 2012/13 budget has been minimal since most contributions given were left aside, he added.