Tanzanians were cautiously optimistic yesterday after Finance minister William Mgimwa’s maiden budget speech listed 10 things they stand to benefit from.
The government will create 71,756 jobs in the education, health and agriculture sectors in the 2012/13 financial year, he told Parliament. And with the removal of excise duty on heavy furnace oil used in industrial production, the cost of production will drop—making commodities cheaper.
Other winners include workers receiving minimum wages and juice factories. The Pay As You Earn threshold was adjusted upwards, from Sh135,000 to Sh170,000.
“In order to protect local industries producing fruit juices from unfair competition from imported juices,” the minister said, “I propose to introduce excise duty of Sh83 per litre on imported fruit juices while locally produced fruit juices will attract excise duty of Sh8 per litre.”
Yesterday’s budget will please some and disappoint others as the government struggles to halt the ever-rising cost of living, boost domestic industrial and agricultural production, generate employment and raise more revenue for development projects.
But consumers have reason to smile as tax on petroleum products was not raised. In fact, the government removed excise duty on heavy furnace oil used in industrial production. This should result in reduced production costs, making commodities cheaper.
Jobseekers also have reason to smile as the government promised to create about 71,756 employment opportunities in the 2012/13 financial year in sectors like education, health and agriculture.
In order to generate more jobs and boost agricultural production, the government will allocate the Tanzania Investment Bank Sh30 billion. The Agricultural Development Bank is to receive Sh40 billion. The money will be spent on loans for youth, entrepreneurs and farmers.
A total of Sh2.6 billion will be spent on enhancing the capital of Tanzania Women’s Bank, Small Enterprises Loan facility and the Economic Empowerment Fund.
The government has also waived presumptive tax on businesses with a turnover below Sh3 million in a move designed to support small businesses and protect low income earners.
“This measure is aimed at protecting government revenue and ensuring that individuals whose turnover is below Sh3 million are not taxed under the presumptive scheme,” Dr Mgimwa added. “Currently, traders whose turnover does not exceed Sh3 million pay Sh35,000.”
Gas users also gain after the exemption of Value Added Tax on equipment that will be used for storage, transportation and distribution of natural gas.
The extractive sector was not forgotten: Dr Mgimwa exempted import duty on machinery and spare parts used in mining activities. Withholding tax chargeable by foreign banks on interests payable to strategic investors was also exempted. This measure is expected to encourage investment in the country.
Only four months ago, Dr Mgimwa did not imagine he would be the centre of attention on Budget Day. But, thanks to President Jakaya Kikwete’s Cabinet reshuffle three months ago, for two-and-half hours last evening many activities stopped as the country listened to the newly-appointed Finance minister deliver the Sh15.1 trillion budget.
It will involve collection about Sh9 trillion tax, non-tax and local government revenue in the 2012/13 financial year.This will be supplemented by Sh6 trillion from aid, commercial and domestic borrowing. About Sh10.5 trillion will be used for recurrent spending while Sh4.5 trillion will be used for development spending.
Dr Mgimwa was ushered into the debating chamber at 4.01pm, shortly after the Speaker opened the evening session. He carried a red brief case.
The new minister appeared hesitant and somewhat unsettled when he started reading the budget at around 4.03pm, but he quickly regained his composure and proceeded slowly but emphatically.
The press gallery, which is usually empty during afternoon sessions, was full by about 3.30pm, with some journalists standing and others sitting on the floor.Two galleries that are usually reserved for ordinary visitors were filled with diplomats. They started streaming in at around 3pm, an hour before Dr Mgimwa was to unveil the budget.
Speaker Anne Makinda said later that there were so many diplomats that she had to create more room for them. There were about 50 ambassadors, including members of the General Budget Support team.
In attendance were the Tanzania Revenue Authority Commissioner General, Mr Harry Kitilya, BoT Governor Benno Ndulu and Controller and Auditor General Ludovic Utouh.
The chairman of opposition Civic United Front, Prof Ibrahim Lipumba, said the budget was not intended to pull poor Tanzanians out of the “economic quagmire”. The fact that only 30 per cent of the budget was allocated to development expenditure meant that it was not intended to boost the country’s economic growth, he added.
Prof Lipumba said the government was forced to allocate 70 per cent of the budget to expenditure because of the “unnecessary” creation of new districts and regions.
The Shadow Minister for Finance, Mr Zitto Kabwe (Kigoma North-Chadema), declared it a budget for people in urban areas. “This is not a budget for people in rural areas, where the population is 30 million Tanzanians,” said Mr Kabwe.
Mr Christopher ole Sendeka (Simanjiro-CCM) said that although the budget addressed a number of important sectors, the allocation to the energy sector was razor-thin and this would not help the Tanzania Electric Company pull itself out of its problems.
Mr Utouh praised the move to formalise the entertainment sector, saying the move would protect actors from piracy.
(Reported by Peter Nyanje and Sturmius Mtweve in Dodoma and Salome Gregory, Frank Aman, Alex Bitekeye, Eric Mchome, Sharifa Kalokola and Antony Leonard in Dar es Salaam)
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