…As budget ‘silenced’ on gratuity tax issue

21Jun 2016
Our Reporter
The Guardian
…As budget ‘silenced’ on gratuity tax issue

The National Assembly yesterday passed the government’s 2016/17 budget proposals without any of the changes suggested by ruling CCM party members of parliament during a sometimes heated week-long debate.

Finance and Planning Minister Phillip Mpango

This included the imposition of a new 5 per cent tax on gratuity packages payable to MPs at the end of each five-year tenure in the House. According to finance and planning minister Phillip Mpango, the same tax will also be imposed on the gratuity payments of all top government leaders from the president downwards.

“When I announced the imposition of this tax on gratuity, President John Magufuli said he would like to be the first to have his gratuity taxed because being a president means that he is the member of parliament - Tanzania constituency,” Dr Mpango told the House in his speech winding up the debate on the 2016/17 budget in Dodoma.

He said with the president leading by example, all appointed political and even non-political leaders will have their gratuity packages subjected to the 5 per cent tax. They include the vice-president, prime minister, cabinet ministers, attorney general, National Assembly Speaker and deputy speaker, regional and district commissioners.

The finance minister’s speech effectively silenced a growing wave of apparent dissent over the matter from the majority of CCM legislators who for the past week - in the absence of their boycotting opposition counterparts - have been literally insisting that the proposal to tax their gratuities be scrapped forthwith.

During last week’s budget debate, ruling party legislators argued that taxing their gratuity packages would be tantamount to double taxation, given the fact that their monthly salaries as MPs are also subjected to Pay As You Earn (PAYE) tax.

According to the MPs, the Tanzania Revenue Authority (TRA) collects between 1.2 million/- and 1.3 million/- in PAYE tax from each MP each month.
Dr Mpango said yesterday the removal of an income tax exemption on the final gratuity packages to MPs is aimed at promoting equity and fairness in taxation to all individuals.

Meanwhile, the finance minister also announced that the government was sticking to its decision to allocate just 44 billion/- to the office of the Controller and Auditor General (CAG) in the coming fiscal year, a measure that had also appeared to discomfort MPs.

According to Dr Mpango, the government slashed funds from the Other Charges (OC) Vote for various government institutions in a bid to do away with unnecessary expenditures. He said the government was confident the CAG’s office can work with such an allocation.

“Some MPs asked us to state whether the CAG’s office was an enemy of the government. The answer is No. This office is important because it helps the government to unmask those who steal, embezzle and misappropriate public funds,” he said.

He added that the government intends to ensure the CAG’s office performs its duties without any hindrances.

A recommendation from several MPs for a 50/- levy to be pegged on every liter of petrol and diesel in a move to raise money for the implementation of water and health development projects in rural areas was also opposed by the government.

According to Dr Mpango, the proposal was good, but experts in economics believe that when oil prices fall the government should capitalize on the price trends to invest in energy-intensive projects, including industries.

“Currently the public is getting some relief following the fall in oil prices. If we impose a 50/- levy, there is no doubt it will trigger domestic prices of the commodity upwards,” the minister said.

He told the House that the government increased the water sector budget from 373bn/- in 2015/16 to 690bn/- for the 2016/17 financial year.

Responding to queries from some MPs last week about why Mwanza, Kigoma, Geita and Kagera had been tagged as the most impoverished regions in the country even compared to the likes of Mtwara, Lindi and Coast regions, Dr Mpango said the former group of regions had much larger rural populations compared to the latter group.

He told the House that overall, the government’s 29 trillion/- budget was meant to cut down unnecessary expenditures and directing the saved money into areas that should trigger economic growth. Tanzanians should be ready to toil today in order to live like kings tomorrow, the finance minister said.

The budget was passed by the one-sided parliament with all 251 voting MPs okaying it. No vote was spoilt.

The Appropriation Bill, 2016 was also passed by the House yesterday and is now awaiting presidential approval to kick start the budget’s actual implementation on July 1.

Top Stories