Mgimwa needs to raise an extra 579bn/-

Finance Minister William Mgimwa has the daunting task of raising about Sh579 billion more that it was initially estimated to finance the 2013/14 budget--if he takes on board the views of MPs on the revenue and expenditure plan he will present in parliament today.

The amount is the sum total of figures suggested during debate on ministerial budgets in the past two months. But the government has committed itself to raising only 129bn/- to beef up the budgets of the Ministry of Water and the Ministry of Fisheries and Livestock Development. 

The money will also go into boosting the youth development fund and the development activities of the Tanzania Broadcasting Cooperation.

The government had initially proposed a total of Sh398 billion for the Water ministry. Of that money, Sh379 billion was meant for development expenditure and 18.9bn/- would be sought for recurrent votes. But MPs rejected the amount, pushing the government to seek alternative ways to raise 184.5bn/- more for the ministry.

After extensive consultations, the announcement came in Parliament that the government had decided to slash Other Charges (OCs) to the tune of Sh100 billion to boost the water budget.

Livestock and Fishing Development ignited a great deal of debate in the House as MPs rejected the 47.1bn/- proposal. They demanded that the government injects an additional 40bn/- but the budget sailed through after the latter agreed to cough up an additional initial 20bn/-.

“After detailed scrutiny, the finance ministry resolved to add 20bn/- from other sources out of the additional 40bn/- required,” said Mr Samuel Sitta, the acting leader of government business in the House during debate to wind-up the Water ministry budget.

Presenting a united front, the MPs also demanded Sh3 billion and another 6bn/- more for the Ministry of Information, Youths, Culture and Sports. The government gave a commitment that it would raise the funds, which to boost the Youth Development Fund and development activities at the state-run Tanzania Broadcasting Corporation respectively.

The legislators called on the government to boost rural electrification by Sh450 billion more, but the government benches made no commitment.

Analysts say the higher amounts are a clear indication that the new budgeting system will work as it gives MPs the teeth to take the government to task should the amount requested be less than required. 

The fresh requests mean that the government has to explore a number of avenues to source the money.

“This amount can be raised in three ways,” said Dr Honest Ngowi, an economics lecturer at Mzumbe University.

The first route is to control expenditure in other sectors. “That is why we say expenditure saved is income earned,” he added. “The government can look for places within its budget where OCs are good enough to make meaningful contributions should they be channelled to cover the areas.”

Closing tax evasion loopholes and reducing tax exemptions significantly would also help. This strategy would be in line with the guidelines for preparing the annual plan and budget for 2013/2014. 

According to the rules, the government’s tax policies and administrative interventions are geared towards increasing tax revenue from 17.2 per cent of GDP in the 2013/14 financial year to 18.2 per cent of GDP in the 2015/16 financial year.

The guidelines also tie realising of the goal to a gradual reduction in the level of tax exemptions, which stand now at 3.8 percent of GDP. The goal is to bring them down to one per cent of the GDP.

According to Prof Elisante Ole Gabriel, the director of youth development in the Ministry of Information, Youth, Culture and Sports, it would not be a surprise if the government were introduce new taxes as it seeks to raise the funds.

Prof Gabriel was certain that introduction of new taxes would be the last resort and would be done only if money taken from the OCs segment from within the initial budget is not be enough to cover the increases. “And I don’t think we have exhausted all the OC avenues,” he said.

The sentiments were echoed by Dr Donald Mmari of the Policy Research for Development (Repoa). “There is no reason for alarm as the money may have been simply deducted from other areas within the budget that had been initially provided for under Other Charges,” he told The Citizen in a telephone interview.

Some analysts say, however, that with MPs signaling that the country can still do well with a little more of taxes from the telecommunication sector and from fuel, the chances are that people should expect new taxes from making phone calls and when buying fuel.

This argument is based on the fact that during debates, MPs noted that deducting certain amounts from airtime could help the country earn more for rural electrification. 

I am of the view that we will have a budget that taxes the usual products like cigarettes, beer, wine and soft drinks…we should also expect at least 100/- more as fuel levy,” said a source privy to oil and energy sectors but who did not want to be named.

The government should concentrate on taxing natural resources and formalising the informal sector in order to increase revenues instead of depending on alcohol and workers alone, he added.
Source: The Citizen, reported by Samuel Kamndaya
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