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President Magufuli’s austerity measures underpin budget that also reduces income tax for low cadre workers
Tanzanian Finance minister Philip Mpango on Wednesday unveiled a TSh29.54 trillion austerity Budget that cemented President John Magufuli cost-cutting measures, scrapped tax exemptions and increased levies on sugar, cement imports and beverages.
Tabling the Budget in Parliament Dr Mpango said the government planned to borrow Sh2.1 trillion from foreign commercial sources to fund infrastructure such as the standard gauge railway.
About Sh17.8 trillion would come from domestic sources, while Sh3.6 trillion (12 per cent of the Budget) would come from foreign aid and development grants, according to Dr Mpango.
He said that Sh5.37 trillion would come from domestic loans and Treasury papers while Sh665 billion would be sourced from local government authorities.
The Finance minister allocated Sh5.45 trillion to transport; Sh1.13 trillion to electricity; Sh4.77 trillion to education; Sh1.99 trillion to health; Sh1.02 trillion to water; and Sh1.56 trillion to agriculture.
Dr Mpango said a tax will be imposed on the golden handshake paid to MPs every five years; a levy on all income from dividends or share sales below 25 per cent; and a tax on private vehicle number plates.
Pay-as-you-earn tax was reduced from 11 per cent to nine for the minimum threshold category and removed nuisance taxes for farmers, importers and exporters.
The minister said import taxes on manufactured goods would be increased to boost industrialisation, while those for key raw materials would be removed.
“To create stability in the prices of petroleum products, tax on those products in this have not been increased,” Dr Mpango said.
He said that the government had abolished retention funds by government agencies, departments and institutions that collect revenues in order to curb wastage.
“The retention exercise has been abused and government institutions will now be required to send all the cash they collect to the Consolidated Fund after which the Treasury would disburse resources according to needs,” said the minister.
The government would ensure its monthly expenditures were done according to the revenue available to avoid accumulation of arrears from suppliers.
The Procurement Act would also be amended to remove flaws in procuring goods and services. Dr Mpango emphasised President Magufuli’s stance that all board meetings, workshops and seminars be conducted in government departments’ conference rooms and that foreign travel, unnecessary publications, national festivals, commemorations and banquets would continue to be restricted.