* Policy Forum praises plans to do away with unnecessary commemorations which cost the government highly
* Policy Forum praises call for thorough review of all exemptions to ensure unnecessary ones are removed
* Policy Forum urges push to make all exemptions public
Policy
Forum’s Budget Working Group (BWG) has commended the government’s
reaffirmed plans to raise revenue and cut down expenditures, especially
those that are unnecessary like luxurious vehicles which cost the
government heavily in terms of both purchases and maintenance costs.
Speaking
recently at a live program “Kumekucha” run by ITV, the Deputy Minister
for Finance Hon. Mwigulu Nchemba reiterated this commitment to reduce
such expenses as well as outlays directed towards hospitality and huge
payments on preparations for commemorations like the Environment Day,
HIV/AIDS Day, Malaria Day, and the Water Week.
Although
these ceremonies have helped raise awareness of social problems and
bring together relevant stakeholders to discuss the progress towards
alleviating them, for Nchemba it is perplexing to commemorate the Week
of Water by spending millions of shillings whilst the nearby communities
experience severe water shortage problems. Policy Forum therefore, has
recommended modest and prudent spending on these events.
The
government’s reiteration comes as the new fiscal year 2014/15 has just
started following the approval of the budget by the Parliament last
month. During the discussion of the budget proposal, the government
stated how it intends to work on the challenges experienced during the
last fiscal year. Some of these challenges include; misuse of public
funds including spending on unnecessary items, inadequate revenue
collection and delays in disbursement. All these affected timely
implementation of planned development projects.
“For
a long time now government officials have been directed to purchase
economic cars as a means of reducing expenditures but this has not been
implemented. What we are going to do now is allocating to them funds for
the purchase of these economic cars because it does not make sense for a
Director to use a Land Cruiser VX while working in Dar es Salaam”, he
said. This is something that everyone should encourage and urge the
government to make sure that they walk the talk.
Different
analyses have been conducted on how the government can improve its
budgeting in collecting resources and proper use of the available
resources. Tax exemptions play a greater role in denying the government
of a significant amount of funds that it could collect and use to fund
its budget.
According to
a study conducted by Policy Forum, Tax Justice Network – Africa and
Action Aid two years ago, it was the noted that Tanzania had the
potential to collect taxes amounting to 20.9% of GDP, according to IMF
estimates, but was only collecting a little over 14% (2009/10
estimates). Although tax revenues as a share of GDP are gradually
increasing (15.8% in 2011/12, this is still short of the acknowledged
potential.
The “Tanzania: Per Tax Exemptions Study”
which was produced in October 2013 for the Ministry of Finance, points
out how much the government is losing through tax exemptions. The report
further argues that it is more efficient for developing countries to
focus on improving their investment climate rather than granting tax
exemptions to corporations. It has actually been confirmed that before
investing in Tanzania businesses will consider other (more important)
factors than the level of tax exemptions they could get.
According
to Sikika, while estimated expenditures on various allowances are
stagnating at TSH 360 bn, the estimates for ‘Fuel, Oils, Lubricants’
increase moderately by 6% to TSH 71 bn. Despite the Government’s clear
intention to control the costs of seminars and workshops, overall travel
expenses are estimated to grow by 11% and the budgets for ‘Hospitality
Supplies and Services’ increased by 19% to a total of TSH 24 bn in the
2013/14 budget.
“With
the understanding that resources are always scarce, a more prudent
spending of public resources has to be emphasized so as to attain
maximum service delivery. Spending needs to be more prioritized and that
funds are allocated to those areas that benefit the majority of the
citizens”, said Nicholas Lekule, Policy Analysis Manager at Policy
Forum.
“Do you know
that some of the government boards conduct their seminars overseas? Do
you know that some of the government agencies the whole team of
executives book first and second class tickets to go and hold a seminar
outside Tanzania for a month?” asked the Deputy Minister.
“It
is from this angle that the BWG commends the proposed measures by the
deputy Minister for Finance to curb tax evasion and reduce exemptions as
well discourage spending on unnecessary items. The Deputy Minister has
detailed how these measures will be employed so as to ensure they are
operational. If his views are worked upon, we hope that our government
will have at least enough resources to provide primary services to its
citizens”, said Fidelis Paul of Wateraid, a BWG member.
“The
introduction of the VAT and Tax Administration reform Bills manifest
part of the government’s commitment to curb revenue loss challenges.
However, Policy Forum feels that more effort should be directed towards
achieving the government target of reducing the ratio of tax exemptions
as a share of Gross Domestic Product to 1.2% from the current ratio of
4.3%,” said Godfrey Boniventura, the Convener of the BWG
Notes to Editors;
-
About the Policy Forum: Is a group of more than 70 registered NGOs that
conducts analysis and advocates on the efficient use and acquisition of
public money at national and sub-national levels. Its Budget Working
Group (BWG) works on conducting and sharing analyses on public budgets
and the budget process from a civil society perspective. More
information about Policy Forum can be found here
-
A report on tax exemption entitled “Tax Competition in East Africa: A
Race to the Bottom? Tax Incentives and Revenue Loses in Tanzania,” can
be found here
- On unnecessary expenditures, you can read a detailed analysis here
- 2014/15 budget speech can be found here
- For more information on the problem of tax exemptions in Tanzania, you can visit here
For more information please contact;
- Boniventura Godfrey, Co Convener of the Policy Forum BWG
Email: boniven...@gmail.com
Phone: +255 714 460815
- Nicholas Lekule, Policy Forum Policy Analysis Manager
Email: pol...@policyforum.or.
Phone: +255 713 393061
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