Dodoma — THE government should review removal of exemption of withholding tax on rental charges on aircraft lease paid to non-residents as it will hamper growth of the aviation industry.
Mr Freeman Mbowe (Hai - Chadema) said removal of the exemption would also hurt the tourism industry as it would lead to increased airfares in the country. "Airfares are prohibitive in Tanzania.
They are too high," he said in his contribution to the 2014/15 government budget unveiled here last week.
The government has proposed removal of exemption of withholding tax on rental charges for aircraft lease paid to a non-resident by a person engaged in air transport business to scale down exemptions estimated to cost the nation between 1.4tr/- and 2.1tr/- annually in lost revenue.
However, Mr Mbowe said the move would be counterproductive in view of efforts to boost tourism, currently the country's leading foreign exchange earner.
Mr James Mbatia (Nominated) also spoke strongly against the idea of removal of the exemption of withholding tax on rental charges on aircraft, arguing that it would destabilize the aviation industry.
Tanzania needed to take deliberate measures to make the aviation industry competitive so as to attract local and foreign investments, he said.
He said while neighbouring countries, including Kenya, were taking measures to reduce costs in the aviation industry, Tanzania was doing just the opposite.