Budget debate kicks off today

MEMBERS of Parliament will today begin discussion of the government budget estimates presented by the Minister for Finance and Planning, Dr Mwigulu Nchemba last Thursday.

The MPs will deliberate on the budget and the state of the economy from today until Tuesday next week before voting for or against the proposed budget.

The government plans a 7.O per cent increase in overall government spending in the next fiscal year during which it will prioritise spending on railways, the national airline, electricity production and natural gas.

The overall spending will reach 44.39tri/- in fiscal year 2023/24 starting in July, from 41.5tri/- in the current year.

The lion’s share of the budget would be financed by domestic revenue estimated to reach 31.38tri/-, about 70.7 per cent of the total budget where Tanzania Revenue Authority is expected to collect 26.73tri/- tax revenues while non-tax revenue is expected to be 4.66tri/-.

Other sources will be grants and concessional loans from development partners estimated to reach about 5.47tri/-, equivalent to 12.3 per cent of the total budget.

The government also expects to borrow 2.1tri/- from non-concessional sources to accelerate implementation of development projects.

“Some of the priorities include construction of Standard Gauge Railway line, improvement of the national airline Air Tanzania Company Limited (ATCL), production of electricity from the 2,115 MW from Julius Nyerere hydropower project and implementation of liquefied natural gas terminal project,” he said.

The government is proposing to exempt all precious minerals, gems, and other minerals sold in local refineries or mineral markets established by the country’s mining commission from value-added tax.

It is also proposing to scrap excise duties on electric vehicles in the budget that is set to begin in July, pending parliamentary approval.

“The reason behind this decision is to promote use of electricity and natural gas in Tanzania to save foreign reserves which are used to import oil,” Nchemba said.

The government also intends to grant income tax exemption on revenue generated from investment returns (such as dividend from shares, treasury bonds and bills) of the National Health Insurance Fund so as to facilitate the provision of medical services to retired members and their partners who do not contribute to the fund after retirement.

He said excise duty on beer and tobacco products would be increased by 20 per cent and duty rates for non-petroleum products would be increased by 10 per cent.

However, domestically manufactured wines, spirits and confectionery products will be spared basing on the National Strategy to enhance the growth of industrial economy, he said.

The current rates of non-petroleum products were lastly adjusted through the Financial Act, 2016 for domestically manufactured excisable goods, and the Finance Act, 2018 for imported excisable goods due to economic recession caused by among others, Covid – 19 pandemic which affected change in consumer behaviour.

The minister said the government intends to introduce an excise duty rate of 30 per cent on cigarettes and other tobacco products including water, tobacco, electronic cigarettes, vape products and shisha and increase excise duty rate on imported energy drinks from 589.05 to 600/- per litre.

The Finance Minister said the government intends to introduce excise duty at the rate of 20 per cent on imported and domestically manufactured gambling machines and increase gaming levy from 10,000/- to 30,000/- per slot machine in bar sites (clubs/places selling liquor).

Other measures will be to introduce excise duty at the rate of shilling 20 per kilogramme of imported and domestically manufactured cement.

To promote local businesses, the government has proposed that from 1st July, 2023, regulatory authorities will be prohibited from suspending business operations due to violation of various legislations.

And as part of measures to promote local manufactures, the government plans to exempt Value Added Tax (VAT) on inputs used to manufacture insecticides and acaricides, the minister said.

The government plans VAT deferment on domestically manufactured capital goods in the list of capital goods that qualify for deferment he said.

According to him the government will zero rate Value Added Tax (VAT) on textiles products manufactured using domestically produced cotton for period of one year.

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