17 June 2012

Tanzania: CTI Welcomes 2012/2013 Budget

THE Confederation of Tanzania industries (CTI) has commended the 2012/2013 national budget, describing it as a relatively good budget that will stimulate economic growth. CTI Chairperson, Mr Felix Mosha, said in Dar es Salaam yesterday that the budget has focused on the core areas of the economy.

He also praised the government for allocating adequate funds in the construction of the natural gas pipeline from Mtwara to Dar es Salaam, saying it would boost electricity generation to bridge the present gap between power demand and generation capacity. "The budget has also focused on strengthening the central railway line and roads so as to reduce transportation costs, especially of bulk cargo.

"The increase in Pay-As-You-Earn (PAYE) threshold from 135,000 to 170,000 shillings will increase take home for employees to meet the ever increasing cost of living," he said. According to CTI, the budget has, however, mentioned too many priorities which cannot effectively be funded by inadequate resources that the country is experiencing.

"The budget lacks strategic linkage between sectors of the economy. There is no link between agricultural and industrial sectors which are critical in transforming the economy to higher level of development," he explained. He also quoted the Prime Minister who had said that the textile sector required immediate rehabilitation, given that out of 16 textile mills which exist, only four are currently in operation.

CTI chairperson noted that the textile sector was very important since it makes a big contribution to the economic growth especially in increasing employment, foreign exchange and poverty reduction. "One of the main reasons which have contributed to poor performance of the textile sector is unfair competition from imported textiles and textile product through under invoicing and under declaration," he explained.

TI has proposed to the government to improve availability of adequate and quality power supply, rehabilitation and improvement of central and TAZARA railways, roads and port, increase employment opportunity by having a strategic linkage between sectors of the economy in agriculture sector and remove VAT on textile and textile products. Following the budget announcement on Thursday, the private sector had urged the government to increase spending on development projects in order to speed up economic growth and rid millions of Tanzanians out of poverty.

"We need to increase spending on rehabilitation of the railway network, ports, airports and roads as a permanent solution to our problems," Tanzania Private Sector Foundation (TPSF) Executive Director, Mr Godfrey Simbeye said. According to the 2012/13 budget proposal, the government has allocated only 30 per cent to development projects while 70 per cent will go on recurrent votes.

Tabling the budget proposal in the National Assembly in Dodoma on Thursday, the Minister for Finance and Economic Affairs, Dr William Mgimwa, said the government plans to spend 15.12tri/- during the 2012/13 fiscal year. He said 10.5tri/- would be spent on recurrent votes, while 4.527tri/- would be for development projects.

The Minister pointed out that 8.714tri/- would be raised by the government from local sources, 8.07tri/- from tax revenue while 644.58bn/- would come from non-tax sources. He said local government authorities are expected to raise 362.2bn/- and development partners through the General Budget Support (GBS) will bring in 842.4bn/- in terms of loans and grants including the Millenium Challenge Account (MCC) 2.3tri/-, while 1.6tri/- will come from domestic borrowing.

The minister further said 1.2tri/- would be secured through non-concessional borrowing. Mr Simbeye said the Tanzania Revenue Authority (TRA) was not collecting tax properly. "The tax base is narrow and registered taxpayers are hardly 400 out of the 44 million population," he said.

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