Tanzania budget plan unrealistic, stakeholders warn govt

Stakeholders have criticised the pre-Budget proposals that Finance Minister Saada Mkuya presented on Wednesday, with some describing the estimates as “business as usual.” She has also come in for criticism for allegedly not involving others in making decisions.

Some Members of Parliament and economists have also argued that the 2015/16 Government Budget projection is unrealistic and offers no direction on what is required to fill the usual budget gaps.

Addressing Members of Parliament in Dar es Salaam on Wednesday, Ms Mkuya pegged Tanzania’s 2015/2016 Budget at Sh22.48 trillion as the government intensifies efforts to boost revenue collection and reduce donor dependency. The amount, presented to MPs, is Sh2.68 trillion more than the Sh19.8 trillion 2014/2015 budget that was approved in June last year.

Ms Mkuya is out to collect at least Sh14.82 trillion of the Sh22.48 trillion locally. The Tanzania Revenue Authority is expected to collect Sh13.35 trillion or Sh2.053 trillion more than the Sh11.297 trillion the taxman garnered in the current financial year. 

The government intends to collect Sh949.2 billion from non-tax revenue and Sh521.9 from municipals while a total of Sh5.77 trillion will be borrowed from foreign and domestic lenders. Some Sh1.89 trillion will be raised from development partners.

But in a quick rejoinder, parliamentary Budget Committee Chairman Festus Limbu said he was disappointed that the estimates were not reached in a participatory way. “I learned this figure (Sh22.48 trillion) here when the finance minister presented them,” he said. “As chairman of this committee, I wonder what kind of process the government used to prepare this year’s Budget.”

According to Mr Limbu, raising the estimates was not a solution when implementation of the current Budget was still off target. Twenty three ministries, departments and agencies have not received any of the amount allocated for the development budget and eight others received less than 10 per cent.

Mr Limbu added: “There is no budget discipline and raising estimates is not the solution. It’s business as usual. I think it should remain at the current level and, at the same time, the government should reduce its lavish spending. That way, we could at least relieve Tanzanians of increased taxes.”

Economics professors who spoke with The Citizen yesterday said there was no way the country could collect Sh14.82 trillion internally without coming up with a new and holistic approach to expand the tax base. Their views were based on the fact that TRA is reportedly collecting funds below target during the current financial year and this poses challenges in implementing some projects.

The taxman is on record as having collected Sh4,934 billion against a target of Sh5,601 billion in the first half of the financial year. Said University of Dar es Salaam’s Prof Humphrey Moshi: “There has been a mismatch between the targets set in the five-year development plan due to failure to allocate more funds to development projects…if the trend in revenue collection is tolerated, the pre-budget proposal can be good only in paperwork.”

Increased government borrowing should be directed to productive sectors and not for recurrent expenditure, notably consumption, he said. Moreover, debts to finance private sector dealers have accumulated and have been carried over from the previous budget. This clearly indicates that there is no rational spending of public funds,” Prof Mushi added.

According to him, the 2015/16 budget reflects unrealistic figures that will not meet the people’s expectations and set targets.

Prof Haji Semboja of the same university echoed those views, and added that budget guidelines and laws to guide budget formulation and implementation were not followed. He said: “We must have integrated regulatory frameworks to guide budget formulation and implementation. 

This year’s budget projection depicts a chronic problem of formulating and practising unrealistic budgets. The budget projection is not realistic because most of the targets set in the previous year have not been implemented and the 2015/16 budget carries over the same cracks. The national budget is not mere paperwork. It is the government’s commitment to bring about development.”

On the ceiling of Sh22.5 trillion set for recurrent and development budgets, he said that given the size of the country and population of about 50 million, the total budget projection should be at least Sh70 trillion.

The “guesswork” in budget projection stemmed from an inability to tax more of the ample natural resources rather than the services and unproductive sector, he added, citing the case of sticking to Pay As You Earn (PAYE) that reduces the employment generation rate. Moreover, data showing a decreasing trend in donor dependency is not realistic since the people must feel that the set development targets have been met. 

“There is a need to grasp that Tanzania is not an island which does not interact with other countries in the world,” said Prof Semboja. “We still lack vital capacity to reduce donor dependency and we are just cheating ourselves with unrealistic data.”

Since the major sources of revenue are tax and non-tax sources, he added, there is a need to streamline non-tax revenue sources and the executive agencies and big parastatals like Tanzania Electric Company (Tanesco) should be managed well enough to raise more revenue for the government’s coffers.
Source: The Citizen, reported from Dar es Salaam, Tanzania
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