Finance Minister Saada Mkuya
From the skyrocketing cost of living to creating jobs, building modern infrastructure that supports economic growth, abolishing unnecessary tax exemptions and introducing austerity measures to cut government spending—these are the key issues that Tanzania expects to be addressed in the 2014/15 Budget today. With national debt having surged to Sh30.5 trillion by the end of March, up from Sh23.6 trillion last year, analysts and laymen expect a roadmap that clearly sets out how the government will tackle the borrowing spree, which has risen to alarming levels.
Finance Minister Saada Mkuya’s maiden budget speech today is pegged at Sh19.5 trillion ($12 billion) but a survey by The Citizen at the street level indicates that the people want just one thing—a budget that supports growth and cuts poverty.
The rate at which prices of vital commodities rise (inflation) has dropped in the past few months but rose slightly last month. Annual headline inflation stood at 6.5 per cent in May 2014, up from 6.3 per cent, according to National Bureau of Statistics figures. The trend has been blamed on rising food prices.
The cost of food has headed north since March 2014 due to a slowdown in supply triggered by the recent rains that destroyed roads and crops in some source regions.
In line with the desire to slash the cost of living, Tanzanians expect that the second woman to head the Finance docket—after Ms Zakhia Meghji, who was dropped in the 2008 Cabinet reshuffle—will resist the allure of raising taxes for those who are already in the net. She should consider widening the tax base instead.
“Relying on beer, cigarettes and soft drinks is not healthy either…increasing taxes on the products every year may make them too expensive and unaffordable for wananchi, who may abandon the beverages—resulting in revenue losses for the government,” says Repoa Executive Director Samuel Wangwe.
Having contained the cost of living to manageable levels, Tanzanians also expect Ms Mkuya to come up with measures to create jobs for youth who are graduating from college in large numbers.
This, according to University of Dar es Salaam Economics Professor Humphrey Moshi, means making it simpler for them to lay their hands on money and farming inputs. Through government funds and efforts, says Prof Moshi, Ms Mkuya may set a separate window at all commercial banks that would cater for the needs of Small and Medium Enterprises (SMEs).
Prof Moshi adds: “SMEs are increasingly recognised as key drivers of economic growth in many countries. They are key contributors to income generation and job creation. The government must work day and night to encourage these businesses to go formal and help them get loans to boost their performance.”
The people want Ms Mkuya to come up with a realistic budget that paints a true picture showing how, where and when the revenue will be sourced and spent.
This, according to Prof Wangwe, will make sure that budget execution goes according to parliament’s plan instead of relying on funds from sources that are unpredictable.
The 2013/2014 budget was hit by a drop in revenue, which had a knock-on effect on what the government actually channeled to the ministries as opposed to what the National Assembly approved.
While business associations have proposed a string of tax proposals that they say will let them operate efficiently and create more jobs, tax experts are of the view that Tanzania has not done enough in terms of simplifying tax administration and making it easier for taxpayers to comply and pay up.
Says Rishit Shah, a partner at PwC: “In Tanzania, only VAT returns can be filed electronically. All other returns can only be filed manually and there is, therefore, significant scope for improving our ranking by introducing electronic returns for all taxes.”
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