This was unveiled by the Minister for Finance and Planning, Dr Mwigulu Nchemba while tabling the 2021/22 National Budget estimates in the Parliament in the capital city, Dodoma, yesterday.
The 36.33tril/- ambitious budget has seen public and private sector employees receiving a breather in tax levied on employment income, Pay as You Earn (PAYE) from nine to eight per cent.
“This measure is a continued effort by the Government to reduce tax burden to employees whereby the rate has been reduced from 11 per cent in 2015/16 to 8 per cent in 2021/22,” Dr Nchemba said.
Equally, employees who were paying money in Value Retention Fee deducted to beneficiaries of loans from the Higher Education Students Loans Board may now have a reason to smile after the government officially waived the six per cent that was being deducted from their salaries.
The 2021/2022 budget also comes as a blessing in disguise to Bodaboda and Bajaj riders who have seen the penalty for traffic offences reduced from 30,000/ o 10,000/-. In the next budget, the government has also allocated 449bn/- for promotion of 92,619 public employees.
According to Dr Nchemba, 63 per cent of the budget is meant for recurrent expenditure, while 13.26tri/- will bankroll development projects.
“Development budget includes 10.4tri/- (about 78.2per cent) will be sourced from internal revenue sources and 2.9tri/- (21.8per cent) will be from external sources,’’ he said.
To meet the target, the minister said, the money is expected to be sourced from tax and nontax revenues, Local Government Authorities (LGAs), aid and grants from Development Partners (DPs) as well as local and external Concessional Loans.
Dr Nchemba told the House that the new proposed tax revenue have taken into consideration the directives issued by President Samia Suluhu Hassan to devise new strategies of tax collection that are friendly to taxpayers.
He said domestic revenue including LGAs revenue is projected at 15.9 per cent of Gross Domestic Product (GDP) in 2021/22.
In the next financial year, the government will also focus on raising the tax revenue to reach 13.5 per cent of the Gross Domestic Product (GDP) from the projected 12.9 per cent in 2020/21.
The Finance Minister proposed amendment of Roads and Fuel Toll, CAP 220 to increase Road and Fuel Tolls by 100/- per each litre of Petrol and Diesel to be used for road maintenance in rural areas through (Tanzania Rural and Urban Roads Agency) (TARURA).
“This measure is expected to generate government revenue by 322.15bn/-,” he said.
The government proposes amendment of the Petroleum Act to increase the Fuel Levy from 150/- to 250/- with the view to reduce adulterations of fuels due to the increase of Road and Fuel tolls on Petrol and Diesel.
The government has also proposed amendment of the Electronic and Postal Communication Act to impose a levy of between 10/- to 10,000/- in each mobile money transaction of sending and withdrawing with the amount of the levy varying depending on the value of each transaction sent or withdrawn.
Through this proposal the government is expected to increase revenue by 1.25tri/-. He also proposed imposing a levy of between 10/- to 200/- per day per SIM card depending on the ability of the user to recharge the balance that will increase government revenue by 396.30bn/-.
The government has proposed to increase excise duty by 30 per cent on all spirits in order to balance the tax rates between Spirits and Beer depending on the alcohol content and through this a total of 60.76bn/- will be collected.
Dr Nchemba said all those measures are expected to increase the government’s revenues by 2.03tri/-. Also, the government plans to introduce excise duty of 10 per cent on imported and locally produced synthetic (plastic) fibres (Heading 55.11 and 56.07) except fishing twine (HS Code 5607.50.00).
This measure aims to promote local manufacturing of sisal products and protect the environment and increase government revenue by 2.64bn/-. The government plans to introduce an excise duty rate of 10 per cent on imported used motorcycles aged more than 3 years (HS Code 8711).
“The objective of introducing excise duty on these products is to discourage importation of used motorcycles and control anti-dumping,” said Dr Nchemba.
The Excise Duty measures on non-petroleum products altogether are expected to increase Government revenue by shilling 2,907.7 million.
The government has also proposed amendment of the Local Government Authorities (Rating) Act to enable the property rate to be embedded in the electricity bill or prepaid meter.
“This measure takes into account that electricity meters are mostly allocated to properties whereas the payer may be the owner or occupier of the rateable property. I propose a rate of 1,000/- per month on ordinary buildings with one meter; and a rate of 5,000/- per month for every storey building or apartments with one meter,” he said.
According to the minister, payment for property tax will be made on every purchase of the electricity unit up to the limit of the rates mentioned for the respective month. However, the government will make Regulations to clarify on properties with a shared meter or single properties with more than one meter.
The government has also proposed to introduce fees for irrigation communities including registration fee of 60,000/-, irrigation service fee of 5 per cent of seasonal harvest for an area for irrigation communities.
Also, the government has further proposed to introduce new fees on standards and review old fees that were charged by the Tanzania Food and Drugs Authority (TFDA) before the role to regulate foods being transformed to Tanzania Bureau of Standards (TBS).
The minister said the government will step up public awareness campaigns to promote participation in the domestic financial market and trade Government Securities in the Dar es Salaam Stock Exchange.
Moreover, the government will continue to implement the Development Cooperation Framework (DCF) to facilitate access to grants and concessional loans and borrowing from Export Credit Agencies (ECAs) which offer relatively reasonable terms.
The government also seeks to introduce a non -final withholding tax of two percent on payments which are made to suppliers of agro-products, livestock and fisheries when supplied to processing industries, millers and other Government Agencies.
However, this measure will not apply to small farmers and sales to Agricultural Marketing Cooperatives Societies (AMCOS). This measure is expected to increase Government revenue by shillings 43.95bn/-.
Moreover, the government has proposed a reduction of the excise duty rate for beer made from locally grown and malted barley from shillings 765 per litre to shillings 620 per litre.
The minister also proposes the amendment of Value Added Tax Act to restore VAT refund for goods purchased in Tanzania Mainland and utilised in Zanzibar by registered persons.
On the budget deficit, the minister said the government is optimistic to ensure that the shortfall including grants does not exceed 3.0 per cent of the GDP in line with the threshold set by East African Community Member States.