Government revenue for the current financial year could be higher by about Sh4.trilllion from domestic sources with proper revenue collection and fixing all loopholes.
Among the most substantial weaknesses area poor legal framework, poor data management, high and unrealistic budget estimates and tax exemptions.
The position was explained in the report of a special committee appointed by National Assembly Speaker Anna Makinda, chaired by Bariadi West MP Andrew Chenge. It was last year tasked to look into government revenue and gives proposal on how to tackle the various weaknesses.
It its report presented to the Speaker, and its summary availed to the media, the committees says if its recommendations are worked upon the government will be able to collect revenues close to Sh15 trillion for the 2014/2015 and 2015/2016 fiscal year.
“The committee has indicated that for the 2014/2015 and 2015/2016 financial the government will be capable of realising revenues of Sh 14.86 trillion,” states the report.
The amount seems to be hefty as it is close to the annual budget for the current financial year which stands at Sh15.1 trillion.
It says: “The unrealized revenue could have made the government do away with the budget deficit in the current financial year.”
Chenge’s report outlined key areas which were sources of government failure to collect more revenue and caused avoidable expenses.
“Power generation using coal and gas instead of heavy furnace oil could help the government save Sh1.1trillion which is spent to generate electricity a year.
The report said further that if the government fulfills its promises to empower Tanzania Petrolium Development Corporation (TPDC) to utilize 20 per cent of Mnazi Bay gas on the basis of the production sharing agreement with investing companies, the corporation will bring to the government annual revenue amounting to $21.2 million, equal to Sh33billion.
On the basis of the 20 years of the current investment agreement the revenue would reach Tsh 676billion at current prices, he said.
“According to a TPDC report the revenue from gas sale on completion of the Mtwara – Dar gas pipeline will bring to government Sh129.02 billion for year 2015, Sh226.97 for 2016 and Sh363.62 for year 2017. This is for Songosongo and Mnazi Bay natural gas,” observed the report.
The Speaker’s special committee went further to recommend that the government should make a decision to use the gas as collateral and benefit from it by realising revenue currently.
“For instance the amount of confirmed natural gas reserve in the deep sea is 32 trillion cubic feet which is equal to six billion barrels of oil. Based on current prices this gas has a value of $660 billion. If the government share is 10 per cent and decides to use it as collateral or forward sale it will collect $6.6 billion equals to Sh10.56 trillion which can be spent during 2014/2015 to 2015/2016 financial year budgets.
Other areas mentioned as revenue potentials for the current financial year are minerals placed at Sh525 billion, mobile phones, lowered or removed tax exemptions, airports, pruned government expenditure, cutting wastage in public procurements, informal sector, retirements, tourism, lands, fisheries, the skill development levy, and better control of revenue flows at the Tanzania Revenue Authority (TRA).