Govt advised to expand scope of tax collection

DODOMA: THE government has been advised to expand the scope of tax collection and ensure proper use of tax collection systems, in order to obtain sufficient funds for the execution of development projects.

The Parliamentary Budget Committee Chairman, Mr Daniel Sillo said that the government has been collecting its revenue by 92.6, 98.2 and 98.5 per cent in 2020/2021, 2021/2022 and 2022/23 respectively, but despite success in revenue collections, there has been a challenge of lack of funds to finance some development projects.

Tabling a report on activities undertaken by the Budget Committee in 2023, Mr Sillo said that lack of funds has been due to increase in accumulated debts to service providers, contractors, payments for electricity and water services and arrears to employees.

He said the situation has been causing the available funds to be insufficient to execute development projects for the respective year,” he explained.

The chairman said as of June 2022, the government had accumulated debt of 3.23tri/-, which is more than 12 per cent of all government spending, exceeding the internationally accepted level of 2 per cent for consecutive years,” he explained.

He said that the National Assembly has resolved that in order to secure funds for development projects and to broaden the scope of revenue collection, it should also review expenditures to eliminate unproductive spending for the government.

The chairman said that the government should also reduce unproductive exemption to reach one per cent of the plan target and to look at the possibility of writing off debts owed by public institutions if they do not cause losses.

He said that the committee’s analysis has found that there are unpaid claims for contractors, service providers and suppliers, which have caused some projects to either not be completed on time or to have their implementation suspended.

Mr Sillo explained that the challenge has caused project costs to increase thus exceeding the funds allocated in the budget and the requests of funds out of budget, thus affecting other activities planned for the respective year.

In addition, he mentioned other effects such as the backlog of claims from suppliers, contractors and service providers from previous years not being paid in the current financial year, thus affecting the payment of claims in subsequent years and the long time taken to audit debts owed to employees, suppliers, contractors and service providers, thus causing debts from one financial year to be paid in the following year.

“The Committee advises the government to ensure that claims documents for contractors, service providers and suppliers are verified and paid on time,” he said.

Regarding the implementation of development projects, he said that in 2022/23 financial year the government planned to use 15tri/- for development expenditure and by June 2023, a total of 13.97 tri/- was used, equivalent to 93.7 per cent of the target.

The committee commended the government for spending 12.26tri/- equivalent to 87.7 per cent in development expenditure which are from domestic sources and 1.71tri/- from external sources which is equivalent to 12.24 per cent.

“The committee congratulates President Samia Suluhu Hassan for the allocation of these development funds. This step demonstrates her commitment to implementing development projects,” he said.