The Confederation of Tanzania Industries (CTI) has said that the government has been slow in taking on board the recommendations it makes to increase revenue collection.Briefing newsmen in Dar es Salaam yesterday on the 19.8trn/- budget estimates tabled by Finance minister Saada Mkuya, CTI board member Stephen Kilindo, said instead the government has continued to rely on the narrow tax base.
The CTI official said during its audience with the government before the national budget, it recommended 26 areas where the government needed to seal revenue leakages and narrow the budget deficit.
However the recommendations were not included in the budget tabled by the Finance minister last week.
The recommended areas and measures to be taken covered excise duty, import duty, value added tax - VAT and levies.
If implemented, CTI said, the measures would enhance competitiveness of local manufacturing and value additions.
“We have been submitting to the government tax measures to enhance the competitiveness of Tanzania’s industry at domestic, regional and international markets and thus favourably contributing to revenue collection. It is unfortunate that the recommendations have not been taken into consideration,” he said.
He named the areas which include removal of exemptions on construction materials which can be produced domestically and charge appropriate duties on imports in accordance with the EAC Common External Tariffs (CET), granting duty remission of 0 percent on Tetrapack, stay application at zero for CET on imported wheat grains, removal of 25 percent import duty on malting barley and reducing import duty on malt from 10 percent to zero.
Others are introduction of 20 percent import duty on used clothes (Mitumba) and increased import duty on cement from 25 to 35 percent and reduction of import duty on formulated supplementary foods for older infants.
Others are the removal of 10 percent of import duty on industrial chemicals and reduction of import duty on printed aluminum barrier laminates from 25 to 10 percent. Aluminum barrier laminates is a basic raw material in the production of toothpaste.
On excise duty, Kilindo who was speaking on behalf of CTI chairman Dr Samwel Nyantahe, highlighted introduction of 50 percent excise duty on imported khanga, kitenge, kikoi and printed fabrics (cloth) of cotton and synthetic material, and 20 percent excise duty on imported plastic shoes and slippers.
He said the government should also impose 20 percent excise duty on dry cell batteries but remove excise duty on carbonated soft drinks and drinking water.
CTI also advised VAT exemptions on raw packaging materials and 9.9 percent on pharmaceutical raw material.
It called for reduction of skills and development levy progressively from 5 percent to best practices rates of between 1 and 2 percent.
Likewise it called for introduction of an export duty of US$100 per tonne on sunflower seeds.
The industrialist lobby warned the current situation where import and excise duties are changing annually saying it becomes difficult for businesses to plan ahead and make long term investment decisions.
“In the government’s search for new revenue, it is vital to think in a longer term perspective and create a stable environment for tax level and tax collection,” he said.
He however, welcomed the initiative for a new tax administration law planned to move the country towards a transparent tax system and reduce load on business.
For her part, CTI Executive Director Christine Kilindu, said the government should also carry out studies and surveys that would expose challenges that are caused by the current CET regime on the products.
For example, she explained that a number of small scale industries which have been making a turnover of more than 200m/- annually do not pay tax.
“We need a government set mechanism by which it would identify all industries and task them to pay the required taxes,” she said noting that there are reports that the government plans to undertake survey of industries in Dar es Salaam.
The government ought to put in efforts to maintain the annual inflation rate to a single digit rate, he said.
According to CTI, these measures will stimulate economic growth by enabling industries to increase production and promote local use of materials.
“The business environment for small businesses needs to be made better by improving, for example, infrastructure, transportation and the tax system for small companies,” said CTI policy specialist Akida Mnyenyelwa.
SOURCE: THE GUARDIAN
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