VOW TO CURB PROFLIGACY, BOOST REVENUE COLLECTION

Finance Minister Saada Mkuya Salum

Strict financial discipline and reduction of tax exemptions are among the highlights of the government’s budget for the 2014/15 financial year, as the nation braces for dwindling support from the so-called development partners.

The 19.6tri/- budget unveiled here last week seeks to unlock social and economic opportunities for sustainable development through implementation of priority projects in energy and natural gas, agriculture, water, education, transport and mobilisation of resources which are under the Big Result Now (BRN) initiative.

The budget is up by about 1.4tri/- where 18.2 tri/- was earmarked and it is to be funded from the projected increase in collection of domestic revenue and grants and loans from domestic and foreign sources.

The government will set aside 6.44tri/-, an equivalent of 32.8 per cent of the 2014/15 budget for development expenditure where a total of 4.4tri/-, which is equivalent to 68.7 per cent of the development budget, will come from domestic sources.

The education sector will receive the lion share of 3.4tri/- while transport infrastructure will be allocated 2.1tri/- and energy and minerals will get 1.09tri/-.

The agricultural sector will receive 1.08tri/-, while 1.5tri/- will be allocated for health. The water sector and good governance will receive 665.1bn/- and 579bn/- respectively.

To finance the projects the government seeks to increase domestic revenue to 11.97tri/-, equivalent to 18.9 per cent of GDP which is up from projected revenue for the 2013/14 budget of 11.1tri/- that is, however, unlikely to be met due to failure to meet tax collection targets and delayed aid disbursements from donors.

According to her, actual tax collection up to April 2014 was 7.77tri/- equivalent to annual projections of 10.3tri/-. It is anticipated that up to 30 of June 2014, which is the end of the 2013/14 fiscal year, tax revenue collection is expected to reach 93 per cent.

More dismal performance is seen in collection of non-tax revenue which reached 425.5bn/-, equivalent of 57 per cent of annual target of collecting 741.1bn/-. It is estimated that non-tax revenue will reach 65 per cent only of the annual target by the end of the month.

To address the problem, the Minister for Finance and Economic Affairs, Ms Saada Mkuya Salum, announced sweeping measures to boost revenue collection and rein in tax exemptions estimated to cost the nation between 1.4tr/- and 2.1tri/- in lost revenue.

She said exemptions to be spared would be those which benefit the economy. The government would publish quarterly tax exemption reports which would include the names of individuals, institutions and companies benefitting from them.

In a bid to tighten control on public expenditure, the government would in future procure goods and services directly from manufacturers and suppliers instead of using agents.

The government would also prepare the Budget Act to strengthen public expenditure management and control, she said. The government expects to receive grants and concessional loans amounting to 2.94tr/- out of which 922bn/- will be grants and loans for General Budget Support, 274.1bn/- for basket funds and 1.74tr/- for development projects.

However, the amount is less than what the government expected to receive in the 2013/14 budget. The government expected to receive about 3.85tri/- in grants and concession loans in the previous budget where grants and loans for the General budget support was 1.16tri/- and basket funds was expected to reach 500.4bn/- and 2.19tri/- for development projects.

Ms Salum said the government would borrow 2.95tri/- from domestic market and 1.32tri/- from external market on non-concessional terms to fill in the gap in financing strategic development projects. She is optimistic it can be done provided everybody plays his or her part.