Tanzania has abolished the annual motor vehicle licence fee.
Finance minister Philip Mpango told Parliament in Dodoma during the budget speech Thursday that the government will instead increase the petroleum levy.
The government will also give a tax amnesty to motorists who had yet to clear their dues. The minister said the owners can from July 1, drive their vehicles freely on the Tanzania's roads so long as they have fuel to do so.
To recoup the lost revenue however, Dr Mpango said excise duty on petroleum products will be increased by Tsh40 ($0.02) per litre.
"The increase of excise duty is intended to compensate for the loss of revenue resulting from the abolition of the annual motor vehicle license and address the complaints of imposing fee even if the vehicle is out of use," he said.
Similarly, Dr Mpango proposed to raise registration fees for vehicles, motorcycles and tricycles by Tsh50,000 ($22.35).
The minister said the government will increase spending by 7 per cent to Tsh31.71 trillion ($14.21 billion) giving a budget deficit of 3.8 per cent of gross domestic product.
He said the government plans to borrow Tsh6.17 trillion from domestic markets and another Tsh1.59 trillion from external non-concessional loans.