{{Tanzanians should brace themselves for paying more taxes as the government plans to increase its spending this year by nearly Sh2 trillion compared with what is earmarked for the current financial year,local media reports}}
Preliminary figures for the 2014/15 budget put the forthcoming financial plan at Sh19.9 trillion compared to the current one of Sh18.2 trillion. When Finance minister Saada Mkuya tables the estimates in June, the figure will most likely be more than that after factoring in contingencies and other unforeseen expenditures.
For the budget to be fully financed and effectively implemented, some taxes will be raised and new ones introduced increasing the burden on the already overtaxed few taxpayers instead of broadening the tax base.
The government will also have to borrow heavily to be able to fulfil its recurrent and development budgets that have been provisionally projected at Sh14.64 trillion and Sh5.26 trillion respectively. Although dwindling in recent years and increasingly becoming unpredictable, donor funding will also be a key aspect in this year’s budget at about Sh3.77 trillion.
“As government increases expenditure, it means more collection of taxes from the citizens,” said managing partner Hanif Habib of Dar es Salaam-based certified public accountants Hanif Habib & Co.
Among things that worry investors and irritate the public in general include a poor taxation system and little revenue correction compared with the size of the economy and the abundant natural endowments in the country.
Fiscal experts say this is mostly due to tax policies that are over-optimistic. In the current financial year, the setting of unrealistic revenue targets has seen the government fail to collect budgeted tax collections.
“Also taxation policies are not effective. Lots of double taxation is happening,” Mr Hanif said.
“For example, excise duty on money transfer leads to various double taxation scenarios. The same money is taxed as many times as it changes hands. This is not fair. Excise duty on electronic communication service is also double taxed every time bandwidth is retailed by Internet service providers.”
According to him, the government’s current appetite for borrowing is unhealthy. He said borrowing makes sense when it is used to finance capital spending that leads to an increase in the stocks of national assets.
In this year’s budget domestic revenue is projected at Sh11,713.6 billion, of which tax revenue amounts to Sh10,990.8 billion. Non-tax revenue has been provisionally estimated at Sh722.7 billion while the local government will have to raise Sh377.9 billion.
The guidelines for preparing this year’s budget further show that development partners will contribute Sh3,772 billion in grants and concessional loans. The government intend to borrow Sh4,046.3 billion from domestic and external sources, of which domestic borrowing for rollover of matured government securities is Sh2,265.7 billion.
{the citizen}
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