The government is proposing to spend Sh19.6 trillion in the 2014/15 financial year, which would be an increase of Sh1.4 trillion over the just-ending year’s Budget. The 2013/14 Budget stood at Sh18.2 trillion.
Finance Minister Saada Mkuya who presented the Budget outlook in Dar es Salaam yesterday said the extra Sh1.4 trillion would be derived from new sources of revenue.
The government had struggled for most of the year to raise the required cash, but Ms Mkuya noted that the shortfall would be less than 10 per cent of the target by the close of business in June.
The briefing was attended by, among others, the Prime Minister Mizengo Pinda, Speaker Anne Makinda, several ministers and MPs.
Ms Mkuya underlined measures to raise both domestic revenue and external income to fix budgetary constraints while also reiterating the intention to take serious austerity steps within the government. These would entail, among other measures, a new requirement that at least 10 state corporations remit 10 per cent of their earnings to the Treasury. She did not divulge the names of the corporations that would be thus affected.
The minister said tax exemptions would be reduced to one per cent of the Gross Domestic Product (GDP), a move that would align the margins with those of other EAC member states. Currently, Tanzania has the highest rate of tax exemptions in the region, standing as it is above 2.5 per cent. Ms Mkuya said the law on VAT that is presently pegged at 18 per cent of the product value will also be amended to contribute more to the Treasury and smoothen its implementation.
The government would also draft a Budget Bill to ensure financial accountability and efficiency monitoring of expenditures, she revealed.
Other measures would be preparation of guidelines for payment of accumulated domestic debts, continuity of cash budget system, whereby public spending is based on the rate of revenue generated and continuity in tax payers’ education for improving voluntary tax payments and curbing tax evasion.
The use of mobile testing equipment for assessing the quality of infrastructure will be deployed for the attainment of value for money while the use of electronic fiscal devices (EFD) will be enhanced to garner more tax-revenue.
The government said it would seek to fast-track negotiations with donors for timely release of aid, which was one of the main factors behind of the fall of revenue levels in the 2013/14 financial year.
“The government has formulated these measures because the experience in implementation of 2013/14 Budget has shown a number of challenges, especially slow pace of collection of revenue from both local and foreign sources,” she said.
Out of the targeted spending of Sh19.6 trillion, Sh14.2 trillion will be on recurrent spending, while Sh5.4 trillion will be for development expenditure, according to the Finance minister.
The minister further said the government was optimistic that the gap in 2013/14 Budget would be filled through the availability of foreign loans and capital gain tax revenue from Ophir, Shoprite and Vodacom.
The minister of State in the President’s Office (Civil Society Relations and Coordination), Mr Stephen Wassira, said priority expenditure areas for 2014/15 financial year are infrastructure expansion, particularly the railways, ports, roads and air transport and industrialisation.
Supply of water and electricity in urban and rural areas as well as agriculture will continue to occupy a slot in the government’s top priorities list. The state will also continue with building the human resource capacity.
The minister announced that the state would use private learning institutions to provide education to students in Forms Five and Six.
Mr Wassira said the private sector will play a critical role in the country’s economic development, stressing the government’s determination to continue improving the business environment.