Govt debt servicing to eclipse total salaries by 2.24trillion/-

14Jun 2019
The Guardian Reporter
The Guardian
Govt debt servicing to eclipse total salaries by 2.24trillion/-

OUT of the 33.1 trillion/- total budget funds around 20.86 trillion/- is set aside for recurrent expenditure, being 63.0 percent of the total budget.

Minister for Finance and Planning Dr Philip Mpango

The recurrent budget includes 9.72 trillion/- for servicing government debt and 7.56 trillion/- for wages and salaries. In addition, 3.58 trillion/- is committed for other charges, including Sh 460.5 billion LGAs’ expenditure from own sources.

In order to speed up implementation of infrastructure projects, the government plans to borrow 2.32 trillion/- from external non-concessional loan sources, Budget estimates show.

The loans are close to amounts expected from development partners who are expected to contribute 2.78 trillion/-, around eight percent of the total budget.

Out of the amount, 2.31 trillion/- are grants and concessional loans for development projects, 199.5 billion/- are Sector Basket Funds and 272.8 billion/- are General Budget Support (GBS).

Tabling the 2019/20 budget estimates, Minister for Finance and Planning Dr Philip Mpango noted that the government also plans to borrow 4.96trillion/- from the domestic market.

Out of the amount, 3.46 trillion/- is for rolling over of maturing Treasury bills and bonds while 1.5o trillion/-, equivalent to one percent of GDP comprises new loans for financing development projects.

With 33.11 trillion budgeted funds set for the 2019/20 financial year, at least 23.0t trillion/-, being 69.6 percent will be from the domestic revenue including local government authorities (LGAs) own sources.

Out of the amount, the government plans to collect tax revenues amounting to 19.10 trillion/-, equivalent to 12.9 percent of GDP while non-tax revenue is estimated at 3.18 trillion/-, and revenue from LGAs own sources is estimated at 735.6 billion/-.

Further, in 2019/20, the government has set aside funds for local government elections in 2019 and the preparation of the general elections in 2020.

Development expenditure is estimated at 37.0 percent of the total budget, of which 9.74 trillion/- is from internal sources and 2.51trillion/- from external sources.

Out of estimated development funds 2.48 trillion/- is meant for construction of the Standard Gauge Railway, around 1.44 trillion/- for the construction of the Hydroelectric Power Project on Rufiji River, and 788.80 billion/- for other railway, water and rural energy agency (REA) funds.

About 450.0 billion/- is slated for higher education students’ loans and 288.50 billion/- was set aside for implementation of fee free education.

In addition, the government has allocated 600.0 billion/- for payment of verified arrears for public servants, service providers and contractors for roads, water and electricity projects.

On policy and strategies to increase revenues, the government intends to increase and strengthen domestic resource mobilization to finance government operations.

The government also intends to undertake policy and administrative measures like improving the business environment with a view to attracting investments and promote the growth of small and medium scale enterprises so as to increase the tax base, the minister emphasized.

The measures include reviewing tax rates to promote localized production of industrial goods, and protecting local industries against unfair external competition.

The government also aims to focus on the culture of voluntary tax compliance, widening the tax base and using information and communication technology (ICT) integrated network in tax administration, strengthening tax laws to address challenges of improper levying of taxes, tax evasion and reducing revenue leakages.

On the same note, the government will continue to harmonize and adjust various levies and fees being charged by state agencies, institutions and local government authorities.

The government will continue strengthening the capacity of TRA to detect and control tax evasion, especially through increasing manpower, modern working tools and training, he said.

Amendments were also proposed to the tax structure, including elimination of levies, rates and fees imposed under various laws and procedures, to promote economic growth particularly in the industrial sector, thus increasing employment opportunities and revenue.

The proposed amendments will cover the Value Added Tax Act (CAP 148), the Income Tax Act (CAP 332) and the Excise (Management and Tariff) Act (CAP 147).

Others include the Tax Administration Act (CAP 438),the Road Traffic Act (CAP 168),the East African Community Customs Management Act of 2004,the Budget Act (CAP 439), among others.

“The government has started implementing the Blueprint for Regulatory Reforms to improve the business environment which was approved in 2017/18.The process has started by reviewing various levies and fees imposed by ministerial departments, agencies and regulatory authorities with a view to abolishing some, especially those which are double charged,” the minister told MPs.

He proposed exemption of VAT on imported refrigeration boxes aimed at reducing production costs and promote modern horticultural farming.

He similarly proposed amendment of VAT to zero rate supply of electricity services from the Mainland to Zanzibar.

Abolishment of VAT exemption on sanitary pads was also proposed as the earlier decision did not facilitate availability of this essential product for targeted beneficiaries. Prices remained largely the same and the VAT benefits were pocketed by traders, he declared.

Amendment of the Road Traffic Act by extending the validity period for driving license from three years to five years and increase fees from the current 40,000/- to 70,000/- was also proposed.

New taxes were also slated for locally manufactured and imported wigs and hair extensions. Wigs manufactured locally will now be charged 10 per cent value in tax whereas imported ones will attract a 25 per cent tax charge.

The government also proposed to amend the Road Safety Act (CAP 168) in extending the validity period of drivers’ licenses from three to five years.

An increase in fee for vehicle registration to 50, 000/- from 10, 000/- was also set out while bajaj regiostration fees shift from 10, 000/- to 30, 000/- and motorcycles from 10, 000/- to 20, 000/-.

“This is meant to reduce costs used in printing new drivers’ licenses after every three yearsas the licenses can last for more than five years,” he emphasized.

By Polycarp Machira and Henry Mwangonde, Dodoma