SPEECH BY THE MINISTER FOR FINANCE
HON. BASIL P. MRAMBA (MP), INTRODUCING TO THE
NATIONAL ASSEMBLY THE ESTIMATES OF GOVERNMENT REVENUE AND EXPENDITURE FOR THE
FINANCIAL YEAR 2004/05
ON
INTRODUCTION:
1. Mr.
Speaker, I beg to move that this esteemed
House now resolves to debate and approve Government proposals for Revenue and
Expenditure estimates for the Financial Year 2004/05. The Government budget has
been consolidated into four volumes. Volume one presents revenue estimates,
volumes two and three describe recurrent expenditure estimates for ministries,
government departments, and regions, including urban and district councils.
Volume four presents development expenditure estimates for the ministries,
government departments, regions, and councils. In addition, there is the
2004/05 Finance Bill.
2. Mr.
Speaker, before I table the 2004/05
budget, allow me to express my appreciation to all those who participated in
the preparation and finalization of this budget in various ways. In particular,
I would like to thank the Finance and Economic Committee of the Parliament and
Sector Committees for keenly scrutinizing the budget estimates with a high
standard of professionalism. The invaluable advice offered by these committees
greatly assisted in finalizing the budget proposal being presented today.
3. Mr.
Speaker, preparation of the budget
involved consultations with a broad range of stakeholders, both within and
outside the Government. Let me take this opportunity to thank the staff of
various ministries, independent government departments, regions, councils,
non-governmental organizations, the private sector, national and international
organizations, for their invaluable contributions to the preparation of this
budget. Furthermore, I would like to thank the Office of the Attorney General
for preparing the bills and legal notices for this budget. I would also like to
express my gratitude to my colleagues from the Ministry of Finance, in
particular, the Deputy Ministers for Finance, Hon. Abdisalaam Issa Khatib (MP)
and Hon. Dr. Festus Limbu (MP); the Permanent Secretaries, Mr. Gray Mgonja and
Mr. Peniel Lyimo; and Deputy Permanent Secretaries, Mr. Ramadhani Khijjah and
Mr. Wilfred Nyachia; all Heads of Department and staff of the Ministry of Finance
including all institutions under this Ministry.
Let me also thank the Government Printer for the timely publication of
this budget speech, the budget books and bills related to this budget. Finally,
my thanks go to the various experts and all who made proposals to me and shared
their insights and recommendations regarding policies in particular tax
measures. Their views and comments have been taken into account in this budget.
4. Mr. Speaker, during this fiscal year we
have witnessed the formal establishment of the Pan African Parliament. I would
like to take this opportunity to congratulate the Members of Parliament who
were elected to represent us at that Parliament, that is, Hon. Gertrude
Mongela, MP for Ukerewe, Hon. Dr. William F. Shija, MP for Sengerema, Hon. Dr.
Amani Kabouroo, MP for Kigoma Urban, Hon. Dr. Remedius Edington Kissassi, MP for Dimani, Zanzibar, and Hon. Athumani
Janguo, MP for Kisarawe. I
would particularly like to congratuate Hon. Gertrude
Mongela for her election as the First President of that Parliament. Her
appointment is a demonstration of the confidence that the Parliamentarians of
the Pan African Parliament have towards her as an individual and towards
5. Mr. Speaker,
I would also like to take this opportunity to congratulate Hon. Arcado Ntagazwa, MP for Muhambwe,
for being elected President of the Governing Council of the United Nations
Environment Programme (UNEP). I believe that his election is well-deserved and
symbolizes the confidence that the Governing Council members have on Hon.
Ntagazwa and to our country. I would
also like to congratulate Hon. Sophia Simba MP for
Special Seats and the Chairperson of the Parliamentary Permanent Committee for
Community Development, for being elected to represent
6. Mr. Speaker, we
recall that on
7. Mr. Speaker, other
important events that occurred during this fiscal year include the appointment
of the President of the United Republic of Tanzania, Hon. Benjamin William Mkapa, and Professor Anna Tibaijuka,
as Commissioners in the Commission for
8. Mr. Speaker,
the overall performance of the economy during 2003/04 has been satisfactory
despite the severe drought that was experienced. Preliminary National Accounts indicate that
GDP grew by 5.6 percent in year 2003 compared to the targeted growth rate of
6.3 percent. The inflation rate increased slightly from 4.0 percent in July
2003 to 4.6 percent at end - March 2004.
The increase in the inflation rate resulted from pressure on food prices
following the drought that adversely affected food production, and the sharp
increase in oil prices. Official foreign
exchange reserves at end-March 2004 had reached a level sufficient to cover
imports of goods and services for a period of about 8 months, which is above
the target of 6 months.
9. Mr. Speaker, the implementation of the Government’s Budget
for the year 2003/04 has been satisfactory despite the adverse effects of
drought, which necessitated the provision of additional financial resources to
purchase and distribute food, as well as enabling TANESCO to import oil to
generate thermal power and purchase power from IPTL.
10. Mr. Speaker, in fiscal year 2003/04
the Government planned to collect domestic revenue of at least 13.3 percent of
Gross Domestic Product. In order to achieve this goal, the Government undertook
various reform measures in tax administration and tax structure. These changes
were aimed at expanding the tax base, increasing accountability of tax
collectors and tax payers, eliminating nuisance taxes, improving the business environment,
and increasing the efficiency of the Tanzania Revenue Authority (TRA)
employees. Furthermore, the new Income Tax Act was tabled and passed by
Parliament in April this year.
11. Mr. Speaker, during the first 10 months of this fiscal
year (July to April 2004) domestic revenue collections surpassed monthly
targets. Moreover, budget support from the Bilateral Development Partners, the
World Bank, the African Development Bank and the European Union surpassed
targets, and a large proportion of that aid was received in the first half of
this fiscal year, thus giving us more leverage in executing the budget. It is
expected that domestic revenue targets and budget support for this fiscal year
will be attained.
12. Mr. Speaker, domestic revenue collections for the period
July 2003 to March 2004 reached Shillings 1,089,262 million (one trillion,
eighty nine billion, two hundred sixty two million) equivalent to 3.7 percent
or Shillings 38,396 million more than the budget estimate of Shillings
1,050,866 million. VAT on domestic sales was projected at Shillings 142,242
million during the period under review, but actual collection reached Shillings
148,632 million, reflecting an increase of Shillings 6,390 million or 4.5
percent above estimates for that period. Regarding Income Tax, actual
collections reached Shillings 256,888 million compared to estimates of
Shillings 227,382 million, representing Shillings 29,506 million or 13 percent
above estimate. Import Duty collections reached Shillings 95,239 million compared
to estimates of Shillings 93,562 million, reflecting an over performance of
Shillings 1,677 million or 1.8 percent.
However, non-tax revenue collection by ministries, departments, agencies
as well as regions was below target by 10 percent.
13. Mr. Speaker, the main reasons behind the increase in
domestic revenue include better supervision and improved tax administration
especially with respect to income tax and VAT.
The most important factor was the measure taken to curb tax evasion in
the petroleum sector.
14. Mr. Speaker, in brief, the outcome
of the revenue enhancing measures that the Government took include the
following:-
FIRST
Changes to the Customs
Tariff Structure yielded Shillings 1,717
million during the period July 2003 to March 2004 compared to the target of
Shillings 133.8 million for year 2003/04. This is equivalent to an over
performance of 1183 percent.
SECOND
Changes to the Excise
Tariff Structure for various goods
contributed additional revenue of Shillings 758.5 million during the period
July to December 2003.
THIRD
Reduction of Excise Duty
rate on Liquefied Petroleum Gas (LPG) from Shillings 228 to Shillings 114 per
kilo increased gas usage by 52.6
percent in line with expectation.
Tax exemption for water
borehole drilling equipment had a positive outcome. Imports of such equipment increased by 68 percent in value terms
from Shillings 12,602.1 million in 2002 to Shillings 21,187.8 million in 2003.
FIFTH
I am happy to inform your
Esteemed House that the measures taken to curb tax evasion in the petroleum
sector have been fruitful as anticipated. A
total of Shillings 226,036 million was collected during the period July 2003 -
April 2004, compared to the target of Shillings 208,002 million. This is an
increase of 25 percent of taxes collected on petroleum imports over the same
period during the previous year.
However, the impact of the
export tax of 15 percent imposed on raw hide that was introduced this fiscal
year with a view to promoting domestic leather processing is not satisfactory. Revenue realized during the first six months was Shillings
413 million compared to the target of Shillings 1,080 million for the period
July - December 2003. This area will be subjected to an in-depth review during
next fiscal year to determine ways of making it possible for all raw hides to
be processed domestically for the benefit of livestock keepers and the economy
as a whole.
15. Mr. Speaker, a full assessment of the impact of measures taken by the government to raise
domestic revenue will be determined at the end of this month,
nonetheless, the highlights I have given above confirm that sound policies,
good governance, improvement in tax administration and supervision, contribute
to increased revenue collection. The Government will continue to implement
these measures together with new ones that I will explain later. Furthermore,
the new Income Tax Act that was passed by Parliament in April this year will
become operational from July 2004. Progress has been made in preparing the
Regulations to the Act together with
detailed Notes to the various provisions of the Act. This law will expand the
tax base and introduce a new culture of self-assessment of income taxes.
Moreover, the Large Taxpayers Department under the Tanzania Revenue Authority
has been strengthened leading to efficiency and a substantial reduction in
complaints from such taxpayers.
16. Mr. Speaker,
as explained above, performance on disbursements of grants and concessional loans has been in line with our targets during
the fiscal year 2003/04. By the end of
May, 2004 disbursements of programme grants and loans
reached Tshs. 490,253 million equivalent to 121
percent of the estimate of Tshs. 405,047
million. Most of the funds were received
during the early part of the fiscal year compared to delays that were
experienced in the past, and 90% of committed budget support had been received by
December 2003. Front loading of budget support funds has greatly contributed to
the government’s capacity to address the apparent budget execution pressure
especially those associated with the drought.
This remarkable development is a reflection of positive implementation
of the Tanzania Assistance Strategy (TAS) which guides cooperation with
Development Partners including the harmonization and simplification of
procedures to reduce transaction costs and bureaucracy in aid delivery. This established framework and the open
dialogue and consultative process with our Development Partners including the
Annual Public Expenditure Reviews, have all contributed to increased donor
confidence and commitment of our development partners to support
17. Mr. Speaker,
notwithstanding the good relationship that Tanzania is enjoying with her development
partners which is making her one of the shining examples, there are still many
challenges ahead. These include
strengthening local ownership and more importantly, the need for more dialogue
to ensure that all developed countries strive to attain their commitments to
increase the level of aid as a percent of their GNP to 0.7 percent or more as
agreed at
18. Mr. Speaker,
during the coming fiscal year, the Government will continue its dialogue with
development partners to ensure that there is complete ownership of aid
utilization. This will enable resources
obtained from grants and concessional loans to be
directed to financing those programmes which support our vision in line with
the country’s policies and priorities for economic growth. These priorities include targeted support to
agriculture, education, industry and infrastructure including bridges and paved
roads connecting districts, regions and neighbouring
countries. These are important areas of
investment that can propel us faster from low skills and poverty compared to
other areas which focus more on consumption than production. Planning means making
choices among alternatives that can lead our nation to prosperity in the
fastest possible way. It could
enable us produce abundant agricultural and industrial products, process them
and export to our neighbours, within our region and
even overseas using well maintained roads and our ports especially in the
northern, western and southern parts of Tanzania. And we cannot meet these and other objectives
without human resources trained to a level that is consistent with today’s
world of advanced education, science, and globalization.
19. Mr. Speaker,
allow me, on behalf of the Government, to take the opportunity to express our
sincere gratitude and appreciation to our Development Partners including
multilateral financial institutions who have provided
direct financial resources to support our budget this fiscal year. They include
20. Mr. Speaker, the
Government continues to adhere to the objectives of the National Debt Strategy
in the management of debt and continues to comply with the requirements of the
Loans, Grants and Guarantees Act, 1974 (as amended in 2003). At present loans are solicited from concessional sources only and directed to support priority
sector spending for economic growth and poverty reduction. Moreover, the issuance of Government
guarantees for contracting external loans has been stopped and it is now
prohibited for any official or any agency of the Government to borrow on behalf
of the Government or enter into any arrangement of a financial nature without
first obtaining the approval of the Minister for Finance. The Minister in turn must first be advised by
the National Debt Management Committee established under the Act before he
approves any borrowing proposal.
21. Mr. Speaker,
the Government has continued to seek debt relief from the Paris Club and
Non-Paris Club Creditors as agreed under the HIPC Programme. All Paris Club Creditors except
22. Mr. Speaker,
overall fiscal performance during 2003/4 indicate
improvements in budget execution and increased expenditure efficiencies
especially in Ministries, Departments and Agencies (MDAs).
The Government is therefore starting to realize the initial benefits of the
measures it has been taking over the past eight years in expenditure planning
and implementation, restraint on non essential expenditures and cash budget
management. The improvements are also a
clear signal that the initial problems of understanding the Public Procurement
Act No 3 of 2001 are diminishing.
Moreover, despite the large expenditures associated with food and
electricity shortages caused by the drought, the Government’s recurrent
expenditure has been kept on track and there is no adverse effect on the
underlying budget frame. The Government
has ensured that expenditures on priority sectors for poverty reduction, namely
health, education, water, roads, agriculture, judiciary and legal departments
get allocations in line with their budget estimates regardless of the huge
expenditures for food supply and electricity generation. A clear indication of the strength of the
fiscal consolidation and execution is that the Government did not borrow beyond
the targets set under the PRGF programme with the IMF
and the net domestic financing target (NDF) was also met with comfortable
margins. This was made possible due to improved domestic revenue collection,
frontloading of external budget support which exceeded the estimates,
expenditure restraint and slow pace in the implementation of development
projects.
23. Mr. Speaker, during the period from July 2003 to March 2004 actual total expenditure reached Tshs. 1,722,612 million compared to estimates of Tshs. 1,889,207 million. Out of this amount, Tshs. 422,559 million was for development expenditure and Tshs. 1,300,053 was for recurrent expenditure.
24. Mr. Speaker
it is recalled that, during the February 2004 session, your Esteemed House
approved a supplementary budget amounting to Tshs.
176,784 million on top of the original budget approved for the fiscal year
2003/04. The supplementary budget was to
cater for the adverse effects of drought.
The resources approved were used for procurement and distribution of
food grain to the areas affected by the drought, assistance to TANESCO to
enable it generate thermal electricity instead of hydropower, revenue
compensation to Local Government Authorities following abolition of nuisance
taxes, Government’s contribution to the Government Pension Fund and to the Parastatal Pension’s Fund to compensate for pensions
contributions which were not remitted by various Public Corporations prior to
privatization. Other additional
requirements included costs related to preparation of a Permanent Voters
Register, gold assaying and audit, and procurement of a new Government
plane. These emerging needs were funded
through two main sources, first, additional domestic revenues and budget
support adding to Tshs. 87,250 million, and second,
Tshs 89,534 million from budget reallocation
within the approved votes. The
supplementary estimates are being executed as approved.
25. Mr. Speaker,
on the basis of trends in revenue collection and expenditure outlays, it is
expected that domestic revenue for the fiscal year 2003/04 will exceed the
projected target by Tshs. 74,210 million representing
5.3 percent over performance. It is further expected that, grants and concessional financing for budget support will exceed the
target. Nonetheless, revenue from the
ongoing privatization programme which was estimated
at Tshs. 17 billion may not be realized. Regarding expenditure targets, the trend
shows that both development and recurrent expenditure (in particular other
charges) may not be in line with the expectations for the reasons mentioned
above. However, it is likely that budget
estimates for priority sectors for poverty eradication and economic growth will
be met.
26. Mr.
Speaker, in order to improve
accountability for public funds and strengthen internal auditing function, the
Government has taken a number of measures, including the establishment of audit
committees within the ministries and other government agencies and
institutions. Training sessions are
being conducted to sensitize the MDAs on the
effective use of the committees. An
internal audit manual has been finalized and is being published. Improvements in the National Audit Office are
underway including preparation of strategic plans with respect to core
functions of departments and filing of key positions in the NAO. Amendments to the Public Procurement Act No.
3 of 2001 are underway, with a view to improving efficiency in the
implementation of the Government budget especially with respect to execution of
development projects. The Amendment Bill
is expected to be tabled before this House for first reading during this budget
session.
27. Mr. Speaker,
there has also been remarkable progress in the area of monetary policy. Money supply was tightened, with growth rate
decelerating to 18.7 percent at end March 2004 from 22.7 percent at end June
2003. This is a reflection of a strong
foundation for controlling inflation.
Credit to the private sector in domestic currency increased by 41.8
percent between July 2003 and March 2004, fueled in part by large corporations
switching from borrowing abroad to borrowing domestically. The switching was driven by a number of
factors the major ones being; the need to avoid exchange rate risks and to take
advantage of reduced cost of borrowing domestically stemming from increased
competition among commercial banks.
Thus, the weighted average lending rate has declined to 13.5 percent
while the weighted average deposit rate has increased to 4.1 percent. Consequently the margin between deposit and
lending rates has narrowed from 10.6 percentage points in June 2003 to 9.4
percentage points in March 2004. Although
the deposit rate is still relatively low and that of lending still high, the
trend is encouraging and is a positive sign that banks are now having
more-confidence and understanding of the Tanzania market better, especially in
respect of demand for banking services, and that deposit and lending rates will
continue to change to reflect market conditions. The Government believes that these changes
will happen on account of the measures that have been taken recently to create
incentives and an enabling environment to the banking sector especially through
the amendments to the Land Act, Strengthening of the
28. Mr. Speaker, as regards balance of payments, there is a
substantial increase in both imports and non-traditional exports. Imports have increased by 26.6 percent for
2003, largely on account of fuel (petrol) and food (rice). Fuel imports have increased due to TANESCO’s increased demand for Jet A –1 for generating thermal power instead of hydroelectricity for lack
of sufficient water. Non-tradition
exports increased by 16 percent attributed to gold and manufactured products. Traditional exports remained depressed
although there are signs of recovery in the prices of coffee, cotton, tea and cashewnuts at the World market. Receipts from tourism also rose during
2003. Overall, for the first time, the
balance of payments recorded a surplus of United States Dollars 243.9 million. Taking into account the lower debt service
payments due to debt relief, and an increase in official programme
grants and loans, gross international reserves reached
OTHER IMPORTANT LESSONS LEARNED DURING
IMPLEMENTATION OF THE 2003/04 BUDGET.
29.
Mr. Speaker, Although we are making substantial progress in policy and governance reforms, we
are still faced with many challenges for our nation to become self sufficient
and eradicate poverty. These include:
The First:
Government’s budget is to a large extent still dependent on foreign aid although the level of dependency is decreasing. During 2003/04 donors including international financial institutions have contributed 45 percent of the government budget compared to 47 percent during 2002/03 fiscal year. Therefore despite strong revenue performance the level of dependence remains high.
The Second:
Despite
the focus given to priority sectors for poverty reduction, resources made
available to these sectors are still insufficient.
The Third:
(i)
Although there has been efficiency and fiscal
discipline improvement in government implementation, capacity particularly in
accounting, information communication technology, health delivery etc remains
limited. This partly explains the problems of project implementation and
accounting.
BASIS,
POLICIES AND OBJECTIVES OF THE 2004/05 BUDGET
30. Mr.
Speaker, the thrust of the budget for 2004/05 is to sustain macroeconomic
stability and support on-going reforms for growth and poverty reduction as
follows:-
(i) Attaining
a Real GDP growth rate of 6.3 percent in 2004 and 6.5 percent in 2005, to be driven by agriculture, manufacturing and exports.
(ii)
Domestic Revenue is targeted to reach Tshs 1,739,288 million) equivalent to 13.8 percent of Gross
Domestic Product.
(iii)
Inflation is targeted at 4 percent by end June 2005
and stabilize at that level in the medium-term
consistent with major trading partners and those we compete on exports.
(iv)
Maintaining gross international reserves at a level
above six months of imports of goods and non-factor services.
(v)
Reducing aid dependency ratio of government budget
to 41 percent in 2004/05.
(vi)
Monitoring implementation of the micro-finance
policy and the credit guarantee scheme for small-medium enterprises to create
conditions for economic development through bank credit.
31. Mr.
Speaker, the first cycle of the Poverty Reduction Strategy is now complete
with the publication of the third Progress Report. The report describes the results of various
studies on the status of poverty in the country. Minister of State, Vice President’s Office,
responsible for the implementation of the Poverty Reduction Strategy, will
provide more information on the report.
The report, among other things identifies constraints in development of
agriculture which is the most important sector in the economy. These include lack of access to credit for
inputs and production, lack of extension services, a poor investment environment,
poor infrastructure and many others. The
small size of farms, inadequate use of technology, and dependency on rain are
the main obstacles to meaningful transformation of the sector and the rural
communities. The Government has been taking measures to reform the sector, but
problems remain.
32. Mr.
Speaker, in order to improve agriculture, the Government is taking
additional measures aimed at creating better environment for attracting
investment in the sector, and at the same time enabling small scale farmers to
increase productivity and reduce poverty.
The measures include:-
One: Under
the Income Tax Act of 2004:
(a)
Introduction of 100% capital allowance for costs
relating to cleaning of land, irrigation systems, planting of permanent crops,
and environmental preservation or control of land degradation on agricultural
land. Under normal accounting principles
these costs are considered to be of capital expenditure nature and would be
deductable over a long-run.
(b)
Costs associated with environment preservation on
the land used for agriculture, livestock, fishing or for enriching the soil
after degradation, will be deducted in the estimation of income as provided in
the Income Tax Act.
(c)
Research and development costs for agricultural
farms and livestock will be deducted for the purpose of income tax.
(d)
Irrigation equipments have been accommodated in the
same category with the heavy trucks for assessing the maximum capital
depreciation rate of 25 percent per annum.
(e)
Tractors and other plants for agriculture,
livestock farming and fishing have been categorized in the same group with the
plant and machinery used in manufacturing and are to
be allowed a capital depreciation of 50 percent in the first year, and 25
percent per annum in the subsequent years.
(f)
Business community dealing with
agricultural products are not required to pay tax on equal quarterly
installments, but at the end of the year after harvest.
Two: Under the Customs Tariff Act,
Agricultural implements and inputs
such as tractors, pesticides and fertilizers are exempted from customs
duties. Any remaining duties in this
area will be abolished.
Three: Under the Value Added Tax Act, 1997
(a)
Agricultural and livestock raw products are
exempted from VAT. These include unprocessed edible meat, unprocessed livestock
products, unprocessed fish products and all other unprocessed agricultural
products.
(b)
No Value Added Tax on agricultural and fishing
inputs such as pesticides, fertilizers, veterinary drugs and equipment,
agricultural equipment such as tractors, hoes, spades, harrows, shovels,
fishnets, machinery and fishing accessories.
(c)
There is also VAT relief on agricultural products,
which are exported in respect of farmers who have formed cooperative societies
or associations that are registered under the VAT Act.
Four:
Under the Stamp Duty Act
Agricultural,
livestock and fishery products are exempted from stamp duty. Furthermore, stamp duties are not collected
at community markets where these products are sold in large quantities.
Five: Under
Local Government Finances Act.
(a)
The Act prohibits Local Government to charge crop cess at more than 5 percent of the farm-gate price. Furthermore, the charge may only be levied in
the district in which the produce originates or is first bought from farmers,
not in the districts where it passes through on its way to markets or other
districts or neighbouring countries.
(b)
Taxes and fees to be charged are only those listed
in the Local Government Finances Act, 1982 and Finance Act of 2003.
Six:
In the Government Expenditure Budget
(a)
The Government continues to set aside funds for
implementing District Agricultural Development Plans.
(b)
The Government will continue to set aside funds for
subsidizing part of fertilizer transport costs to Rukwa,
Mbeya, Iringa, Ruvuma Regions, and other Regions with adequate rain to be
announced by the Minister for Agriculture and Food Security.
(c)
The Export Credit Guarantee Fund for Cooperatives
and other organizations handling farmers’ produce will be enhanced
through additional funds in this budget.
This scheme has proved to be very successful.
33. Mr.
Speaker, these measures of abolishing nuisance taxes, providing tax relief
and subsidizing transport cost of fertilizer were announced during the current
fiscal year to farmers, livestock keepers, and fishermen, particularly small
and medium scale producers who form the majority of the population of
34. Mr. Speaker, additional
measures to empower Tanzanians to mobilize savings and investments will
be taken during the fiscal year 2004/05.
The measures will include the sale of units by the Unit Trust of
Tanzania (UTT); establishment of collective investment schemes to enable
individuals make collective savings and participate in the capital market as a
group; and active Government participation in the establishment of a credit
reference bureau which will add to the confidence of banks to give credit. Moreover, the measures that are being taken
to improve the operations of the Credit Guarantee Scheme are aimed at
empowerment of Tanzanians to participate effectively in the management of the
economy.
35. Mr. Speaker, during fiscal year 2004/05,
the Government plans to collect shillings one trillion,
(i)
To strengthen the
supervision and administration of the Tanzania Revenue Authority, especially by
expanding the Large Tax Payers Department;
(ii)
To implement the new Income
Tax Act, 2004 and to complete the review of all tax-related legislature with a
view to improving them;
(iii)
To commence implementation
of the East Africa Customs Union Protocol;
(iv)
To realize revenue from the
sale of gas from the Songo Songo
project. Gas is expected to begin flowing from July 2004;
(v)
To continue rationalization
of the tax structure so as to improve tax efficiency as well as to create
incentives for select sectors in order to accelerate GDP growth;
(vi)
To strengthen revenue
collection in Ministries and Departments, particularly those under the
retention scheme;
(vii)
To closely monitor trading
of petroleum products including the introduction of Flow Meters at the port in
order to thwart tax evaders. Flow meters are expected to be installed in July
2004;
(viii)
To continue the Treasury
Voucher/Cheque System and to examine the possibility
of including goods imported under donor-funded projects;
(ix)
To improve TRA’s performance by increasing technology usage, improving
staff incentives, training and good service delivery to taxpayers;
(x)
Beginning July 2004
inspection of imported goods will be conducted at the point of destination
rather than the current practice of pre-shipment inspection. This approach will
make the business environment more conducive, will eliminate the harassment
faced by importers and will improve the investment climate;
(xi)
To increase working hours
for Customs so as to reduce the backlog of goods in the port. All organs that
provide customs related services will be required to collaborate closely with
the Customs Department to ensure that this change is successful;
(xii)
The exercise of
rationalizing the provisions of the 1997 Investment Act which require
amendments to close tax loopholes has begun;
(xiii)
A Committee has been
created to review the policy, legal, and fiscal regime governing investments in
the mining sector with a view to recommending measures that will ensure that
the government gets its rightful share of revenue.
36. Mr. Speaker, it is widely recognized
that foreign aid is not the best way to develop a stable and sustainable economy.
Nonetheless, during this period when we are implementing economic and social
reforms to eradicate poverty, the contribution of development partners is an
invaluable asset to our Government. Our right policies and good economic
management have convinced development partners to continue to extend support
through the budget. As I stated earlier, it is important to use this
opportunity effectively to ensure that the support is used properly to generate
the intended output and results as has been the case in many Asian countries.
The Tanzania Assistance Strategy (TAS) will continue to guide us in this endeavour to ensure effectiveness of aid.
37. Mr. Speaker, based on the consultations
that we have had with the development partners and international financial
institutions, during the fiscal year 2004/05 we expect to receive grants and
concessional loans totaling (Tshs 1,367,025 million)
equivalent to 41 percent of total Government expenditure; out of which Tshs 509,140 million is budget support, and Tshs 857,885 million for development projects. This level
of grants and loans represents an increase of Tshs
191,204 million or 16 percent over this fiscal year 2003/04. We expect that
development partners will maintain their support to
38. Mr. Speaker, the Government intends to
draw down its reserves with the Bank of Tanzania and to borrow from the
domestic financial market by issuing short and long term securities a total of Tshs 231,110 million.
These borrowings shall be largely used to settle maturing obligations,
that is, roll-over and to pay for other debts arising from agreements. A
portion will also be used to fund the export credit guarantee scheme.
Expenditure
39. Mr. Speaker, during the fiscal year
2004/05, the Government is committed to continue to enforce fiscal discipline.
Further, the Government will continue to strengthen the Integrated Financial
Management System, to be complemented by expansion of the computerization
system until it reaches the Local Government level.
40. Mr. Speaker, the budget allocation for
2004/05 has taken into account the following:
(i) More attention to priority sectors in line
with the Poverty Reduction Strategy. However, in view of the new financing
needs associated with the forthcoming General Elections, and requirements of
the energy sector particularly for electricity, the additional allocation to
the poverty reduction sectors will not be robust, except for those sectors that
receive substantial external financing.
(ii) Allocation for defraying transport cost for fertilizer to the
selected regions has been maintained in 2004/05 budget.
(iii) The cash budget system will be maintained
and improved.
(iv)
Additional allocation has
been made to the Export Credit Guarantee Scheme (ECGS) and the Credit Guarantee
Scheme for Small and Medium Sized Enterprises (CGS-SME);
(v)
Agricultural development
initiatives at district level targeting at least one food crop and one cash
crop will continue to be supported through budget allocation.
(vi)
In recent years Government has moved to allocate own funds for
construction of major roads considered strategic for development. During
2004/05, this strategic approach will be maintained and enhanced to ensure that
contracts that have been entered into with contractors are respected, and the
road projects are completed on schedule.
(vii)
The Government will
continue to implement its pay reform policy for civil servants, so as to reach
4.8 percent of GDP targeted under the policy. Further, the Government is soon
to finalise a specific framework for processing
salary adjustment arrears, including those for teachers. Payment of these
arrears was suspended on account of fraud that was uncovered a year ago
involving a few untrustworthy civil servants.
Investigation is almost complete and legal action is underway against
the perpetrators.
(viii)
The Government’s policy is
to implement large projects in phases depending on availability of funds. First
priority is placed on projects that have legal agreements or agreements with
development partners.
(ix)
The budget continues to
allocate 4.5 percent of proceeds from non-project grants to the Government of
Zanzibar. This policy will continue until the final recommendations are
received from the Joint Finance Commission and adopted by Government.
(x)
During 2004/05, the
Government will restore to the Pension registry those retirees who had received
their pensions in lump-sum. These retirees
are expected to begin receiving pension payments from January 2005 so as to
allow for amendment of the relevant law.
(xi)
In view of the recent
increase in incidences of crime and other offences, and in preparation for
forthcoming general elections the budget for 2004/05 has enhanced allocation
for national security agencies.
(xii)
During 2004/05, additional
resources have been allocated for emergency food supply in the event of adverse
weather conditions and for Strategic Grain Reserve.
(xiii)
The budget for 2004/05 has allocated funds to meet
emergency power supply requirements of TANESCO, as well as in support of
TANESCO in meeting contractural capacity charge
payments in respect of IPTL and Songas.
(xiv)
In light of the anticipated increase in the number
of Parliamentarians after the General Elections next year, Social Security
Funds have agreed on their own accord to construct Parliament Chamber under a
Build-Lease-Transfer (BLT) model. For
this reason, this project is not in the budget for 2004/05. The Government is considering applying this
model to other large projects including road construction.
(xv)
Cognisant of the
importance of sports, the budget for 2004/05 has allocated funds for the
construction of a modern sports complex.
The bulk of the project cost will be covered by Chinese Government
grant.
(xvi)
Transfers (grant) to the District
Councils during 2004/05 is based on a new formula that has
been developed following broad consultation with stakeholders. The new formula
has been applied in the allocation of recurrent expenditure for the health and
education sectors at the district level, and for all sectors at district level
in respect of development budget. The new formula addresses the concerns of the
Honourable Members of Parliament regarding equitable distribution of resources
across regions and districts. Detailed description will be provided by the
Minister of State – President’s Office, Regional Administration and Local
Government when he tables the budget for his Ministry.
THE
STRUCTURE OF 2004/05 BUDGET ESTIMATES
41. Mr. Speaker, As I mentioned earlier, the
Government aims to collect domestic revenue totaling Tshs.
1,739,288 million in fiscal year 2004/05 under the current tax structure and
with the proposed amendments to the tax structure. This level of revenue
represents 13.8 percent of GDP. The
Government also aims to enhance its domestic revenue by Tshs.10,115 million sourced from the sale of shares in various
companies of which Government is a shareholder.
42. Mr. Speaker, the
Government plans to spend a total of Tshs.3,347,538
million during fiscal year 2004/05. Given domestic revenue projection of Tshs. 1,739,288 million, and proceeds from the sale of
Government shares worth Tshs. 10,115 million, the
budget would have a financing gap of Tshs 1,598,135
million. This financing gap will be covered largely by grant aid from bilateral
donors, and the European Union and concessional loans
from the International/Regional Financial Institutions, specifically the World
Bank and the African Development Bank. Based on the agreements reached between
the Government of Tanzania and the development partners, we expect to receive
grants and concessional loans equivalent to Tshs
1,367,025 million during 2004/05. Therefore, the financing gap shrinks to Tshs 231,110 million. This gap will be met by drawing down
reserves with the Bank of Tanzania and through issuance of government
securities in the domestic financial markets.
43. Mr. Speaker, I have explained at length achievements recorded in the fiscal policy
area arising from measures taken by the Government to increase efficiency in
tax collection and curb tax evasion. I
also have explained Government’s intention to see to it that productivity in
agriculture is enhanced as a means to improve rural incomes as well as to
increase food production and exports.
The Government will take additional measures this coming fiscal year,
with a view to providing more incentives that would induce medium-scale and
large investments in this sector to effectively utilize the land which is at
the moment not fully utilized and enhance employment in the rural areas. The focus is also on increasing productivity
for industries producing farm implements and agro-processing industries. The additional measures are as follows;
(a)
Large scale agriculture and
livestock farming:
First: In the Income taxation, 100 % capital deduction will be allowed
on plant and machinery for agriculture in the year the capital is put into
operation. This deduction will include irrigation system and machinery. The
purpose of this measure is to increase investment in agriculture technology.
Second: Under stamp duty taxation, a flat nominal amount of shs.500 will be
charged on conveyance of agricultural land. The purpose of this measure is to
reduce transaction costs on conveyance of ownership of agricultural land
Third: The Skills and Development Levy, will
be abolished in respect of employment in agricultural farming.
(b)
Small-Scale Farmers and Livestock
Farming.
Measures adopted last year aiming at improving the incomes
of farmers including small-scale livestock farmers need to be implemented
effectively. I would like to make a
reminder that, District Councils, Town Councils, Municipal and City Councils, are allowed to collect only those local government
taxes and fees stipulated in the Local Government Finance Act as amended in
2003. Furthermore, Local Authorities are
reminded that there is a 5% cap of farm gate price charged as agricultural
produce cess and that the cess
is applicable only within the borders of the District from which the crops have
been produced. Further, it has been
observed that some Local Authorities are charging numerous new contributions on
the agricultural produce under pretext that they are voluntary
contributions. It should be emphasized
that such contributions can be allowed only if villagers are involved in
deciding on the arrangements and such contributions should be for special projects
that are implemented within the location of the village concerned, based on
villagers own initiative.
(c) Industries producing agricultural implements and fishing gears.
As agricultural
inputs and fishing gears are exempt from VAT, local
producers of these products are facing unfair competition
from imports. In order to resolve this
problem, the Government proposes to include these products in the zero-rated
supplies category when these products are sold by local producers so as to enable local producers to reclaim input VAT on agricultural
inputs and raw materials. This measure will improve the investment environment
associated with the production of agricultural implements.
(d)
Industries producing Agricultural
and fish products.
In addition to measures under the Income Tax Act:
First: It is proposed that wine and brandy produced from locally grown
grapes be exempted from excise duty. The
purpose of this measure is to expand the local market for grapes so as to
increase production of this crop particularly in
Second: It is proposed to exempt black tea and packaged tea from VAT so as
to enhance its competitiveness following liberalization of the tea market in
the EAC context. The main objective is
to protect incomes of small and medium scale farmers in tea production.
EMPOWERMENT
OF SMALL AND MEDIUM SIZE ENTERPRISES:
44. Mr. Speaker, another area which will be given focus in this budget is the Small and Medium size businesses (SMEs). It is clear that in terms of employment creation after agriculture, follows the small and medium size enterprises. The agricultural sector has a very important role to play in the poverty reduction strategy. Another focus of this budget is to improve the business climate in order to create conducive environment for the growth of small and medium size enterprises.
45. Mr. Speaker, currently, SMEs with sales turnover of less than Tshs. 20 million per annum are paying two types of taxes to TRA; stamp duty on receipt, and presumptive income tax. These taxes are assessed on the basis of value of sales. In order to reduce compliance costs for such businesses it is proposed to abolish stamp duty on receipt, and increase the presumptive income tax rates to partly compensate the loss resulting from this measure. The proposed new annual rates of presumptive income tax are as follows:
|
Sales turnover (Tshs.) |
Tax payable where
sufficient records are kept to demonstrate turnover band |
Tax payable where records
are not kept to demonstrate turnover |
|
0 - 3,000,000 |
1.2% of turnover per year |
Tshs.35,000 per year |
|
3,000,001 - 7,000,000 |
Tshs.35,000 plus 1.5% of
turnover in excess of Tshs.3,000,000 per year |
Tshs.95,000 per year |
|
7,000,001 – 14,000,000 |
Tshs.95,000 plus 2.8% of
turnover in excess of Tshs.7,000,000 per year |
Tshs.291,000 per year |
|
14,000,001– 20,000,000 |
Tshs.291,000 plus 5.0% of
turnover in excess of Tshs.14,000,000 per year |
Tshs.589,000 per year |
Apart from reducing the overall tax burden, this system will provide incentive for better record keeping among small businesses and build confidence of lenders for them to borrow. Furthermore, if the small individual businesses keep records on income and expenses to a standard satisfactory to TRA, they will file returns and be assessed on their profits rather than their turnover, which is fairer.
46. Mr. Speaker, It is also proposed to increase the threshold at which VAT registration becomes compulsory from Tshs. 20 million to Tshs.40 million per annum. The purpose of this measure is to remove small businesses from the VAT threshold taking into account compliance and administrative costs involved in the collection of this tax. However, businesses below the new threshold may still register if they wish to do so but will have to satisfy TRA conditions on compliance. This measure will lower compliance costs for small businesses and administrative costs for TRA. If this reform becomes successful in terms of revenue enhancement, the government will consider reducing the VAT rate. The lowering of VAT by two percentage points (2%) only will result in revenue loss of shs.59,000 million which will have serious impact on the budget.
47. Mr. Speaker, the third proposal aimed at improving business environment and removing impediments in business undertakings, particularly the small and medium size enterprise sector is on business licensing under the Business Licensing Act of 1972. Given that business licenses are intended to play a regulatory role and not as a source of revenue, the following measures are proposed.
First: To abolish business license fees for hospitals, dispensaries and health centres operated by religious organisations to allow expansion of health services delivery by these organisations.
Second: To abolish business license fees charged
under the Business Licensing Act, 1972 for businesses with a turnover of less
than Tshs.20 million per year in order to reduce costs of establishing
businesses for both youth and small entrepreneurs. These businesses will be provided with business licenses and no license
fees will be charged.
Third: All businesses with a turnover exceeding shs.20 million will pay a license fee of shs.20,000/= only, and this measure is intended to reduce costs of establishing business and create a conducive environment for transforming many businesses into the formal economy.
Fourth: To abolish license fees charged under the Business Licensing Act of 1972 where a business is regulated by another law in a specific sector in which it is provided, (for example banking; insurance, hotels e.t.c). It is important again to underscore the point that the objective of a license is to supervise businesses and not raising revenue.
Fifth: Business license under the Business Licensing Act be issued only once when a business is established and not every year. District Councils, Town Councils, Municipals and City Councils will be required to prepare and provide accurate statistics on business licenses to the relevant authorities whenever they are asked to do so. Given that business operators are also required to register their businesses with TRA through the Tax Identification Number (TIN), there is no need for them to renew business licenses every year.
Six: In addition to these measures related to taxes and other levies, I would like to repeat what I said earlier that the Small and Medium Enterprises Credit Guarantee Scheme which was established this fiscal year, has been allocated an additional of Tshs.1,500 million in this budget. The regulations and administrative procedures for the management of this scheme have been finalized, and the scheme will be operational soon.
48. Mr. Speaker,
Further to the measures enlisted above intended to lift agriculture, small and
medium size businesses, the Government is proposing yet a number of new
measures in the tax structure as follows:
(i)
The Income Tax Structure
As you are aware, the New Income Tax Act (2004) which was
passed by the Parliament in April this year will be effective from
(ii)
The Value Added Tax Structure
(a)
In order to allow domestic producers
to be refunded VAT paid on raw materials, it is proposed to transfer the
following items from the VAT exemption schedule to VAT zero rating schedule. These are
pharmaceuticals, veterinary drugs, mosquito nets and articles for blind and
disabled persons.
(b)
To amend the tax exemption regime
for those with tax exemption on vehicles so as to include vehicles, which are
in HS Code 8703, 8702.10.20 and 8702.90.20 which are vehicles with engine
capacity of cc 3000 or above.
All changes proposed in respect of Value Added Tax (VAT) are expected to
reduce Government revenue by shs.4,954 million.
These new measures which
I have just mentioned are aimed at improving the agricultural and business
sectors and enable our people particularly those in the low income band to join
the formal economy and be able to earn more income and reduce poverty among themselves.
Furthermore the reforms in business license fees structure responds to
concerns of investors both domestic and foreign, and donors, including
religious NGOs which are offering social services in this country.
(iii) THE STRUCTURE OF EXCISE TARIFF
Mr. Speaker, it is proposed to make some amendments in the area
of excise tariff as follows:-
First, It is proposed to adjust for
inflation, the specific excise duty rates on the following products:-
One: Carbonated
soft drinks, from the current rate of shs.37.50 per litre
to shs.40.00 per litre.
Two: Beer,
from the current rate of shs.232.00 per litre to
shs.243.0 per litre.
Three: Wine produced with less than 75
percent
content of locally grown grapes from the
current rates of shs.743.40 per litre to shs.780.00
per litre.
Four: Spirits
from the current rate of shs.1,102.50 per litre to shs.1,158 per litre.
Five: Cigarettes
containing tobacco of length not exceeding 70 millimetres,
with domestic tobacco content exceeding 75 percent, from the current rate of
shs.3,781.05 per 1000 cigarettes to shs.3,970 per 1000 cigarettes.
Six: Cigarettes
containing tobacco of length equal to 70 millimetres
or more, with domestic tobacco content exceeding 75 percent from the current rate
of shs.8,920.30 per 1000 cigarettes to
shs.9,367 per 1000 cigarettes.
Seven: Other cigarettes
containing tobacco not
mentioned in Five and Six above from shs.16,206.75 per 1,000 cigarettes to
shs.17,017 per 1,000 cigarettes.
Eight: Cut rag/filler from the current
rate of
shs.8,183.70
per kilogramme to
shs.8,593 per kilogramme.
Nine: The excise tariff on Cigar remains at 30 percent
ad-valorem.
Second:
It is proposed to impose
excise duty on
Satellite Televisions
broadcasting
(DSTV) at a rate of 5% of retail selling price on provision of such services.
Lastly, Exemption on excise duty on vehicles for
eligible beneficiaries is amended to include
vehicles under HS Codes 8703, 8702.10.20 and 8702.90.20 with engine capacity of
cc 3000 or above.
The reforms in excise tariff will increase government revenue by shs.6,143 million per year
(iv) Local Government
Finance Act
Mr. Speaker, It is proposed to make an amendment in the
Local Government Finance Act in order to give authority to Local Authorities to
collect royalty on gypsum, pozolana and lime which
are used as raw materials in industries.
(v) Business License Fees Collected by Ministries
and Government Departments:
Mr. Speaker, All the measures
that I have outlined in this area will have adverse impact on government
revenue by shs.14,000 million, which encompasses shs.11,200 million for
District Councils, Town Councils, Municipals and City Councils, and shs.2,800
million for the Ministry of Industries and Trade. This budget has allocated funds to compensate
the Local Authorities and Ministry of Industries and Trade for the full amount
as estimated by themselves.
(vi) Visa Fees and Issuance
Procedures
Mr. Speaker, currently,
foreigners entering
(a) The
Business Visa Fee be reduced from USD200 to USD50, in order to improve investment and
tourism climate.
(b) New system of Visa administration be introduced whereby “Visa Stickers” will be used instead
of stamping the passports, to protect government revenue.
Both these measures are
estimated to generate shs.19,823 million in additional revenue.
(vii) The Customs Tariff
Structure:
Mr. Speaker, three amendments
are proposed in this area:
(a) The Customs tariff structure
will change following the coming into force of the East African Customs Union
Protocol signed in March 2004. These changes include elimination of customs tariffs on goods originating from the
Partner states, on a phased basis and
introduction of Common External Tariff on
goods originating outside the East African Community. Principles
and procedures relating to Customs will be harmonised
across Partner States, although each State will administer the customs and
collect customs duty in their respective
countries. The protocol on the East
African Customs Union will be
implemented after the ratification by the
Parliaments of the Partner States. It is
expected that the Customs Union will
be operational with effect from
(b)
In accordance with the East African Community,
Customs Union Protocol suspended
duties that are currently imposed on some
imported products will be abolished, except for goods
that have been agreed by the Partner States
in the context of the Protocol. This measure will have negative revenue impact of shs.4,811
million for the year 2004/05.
(c) Exemption of Import Duty for eligible beneficiaries is amended to include vehicles under HS Codes 8703,8702.10.20 and 87.90.20 with engine
capacity of cc3000 and above.
Altogether,
the measures on the Customs Tariff are estimated to generate new revenue to the
tune of shs.1,138 million during the fiscal year
2004/05.
It is proposed to make amendments to various tax laws with the objective
of updating them and simplifying their administration as follows:-
a. Income Tax
Act
b. Value
Added Tax Act
c. Customs
Tariff Act
d. Excise
Tariff Ordinance Act
e. Stamp Duty
Act
f. Business
Licensing Act
g. Local
Government Finance Act
h. Vocational
Education and Training Act
i. Gaming Act
Such
amendments will have neutral effect on revenue.
Unless otherwise stated, all revenue
measures shall become effective from
The effect of proposed tax measures for 2004/05
49. Mr. Speaker, the
objectives of the proposed tax measures are to provide conducive
environment for economic growth, employment and poverty alleviation and to
widen the tax base. Some of the measures will have positive revenue impact
while others will have adverse impact on revenue. Overall however, the combined effect of the
measures will be revenue-neutral.
Revenue Measure
|
Revenue Increase/Decrease (shs. millions)
|
|
|
I |
(4,954) |
|
|
Ii |
The Excise Tariff Structure |
6,143 |
|
iii |
The Income Tax Structure |
13,189 |
|
Iv |
The Customs Tariff Structure |
1,138 |
|
V |
The Stamp Duty Structure |
(19,263) |
|
vi |
The Development Levy Structure |
(2,076) |
|
vii |
The Business License
Structure |
(14,000) |
|
viii |
The Visa System |
19,823 |
TOTAL
|
0 |
|
THE STRUCTURE OF 2004/05
BUDGET ESTIMATES
50. Mr. Speaker, in
line with fiscal policies forming the
basis of the budget frame explained above, the structure of the budget
for 2004/05 will be as follows:-
BUDGET SUMMARY
Revenue Tshs. Million
A: Domestic Revenue 1,739,288
(i) Tax Revenue 1,603,886
(ii)
Non-Tax Revenue 135,402
B: Foreign Loans and Grants 1,367,025
(including HIPC)
C:
D: Drawdown on reserves
including domestic financing 231,110
E: Recurrent Expenditure 2,239,000
(i) Public Debt 481,175
(ii)
Ministries (sector ministries)
1,293,467
(iii)
Regions 33,473
(iv) Local
Governments 386,768
(v)
Special Expenditure 44,117
(a)
Wages (MDA) 6,000
(b)
Wages (Central Govt.) 32,699
(c)
Transport escrow account 561
(d)
Anticorruption drive 857
(e)
Retrenchment 4,000
F: Development Expenditure 1,091,590
(a)
Domestic Resources 233,705
(b)
External Resources 857,885
G:
Contingent
Proper 16,948
Total
Expenditure 3,347,538
CONCLUSION
51. Mr.
Speaker, the
2004/05 Budget has been developed in the context of the government’s reform programme with a view to implementing the following
strategies:
(i)
The
objectives of the CCM Election Manifesto of 2000
(ii)
The
National Development Vision 2025
(iii)
The
Poverty Reduction Strategy (PRS)
(iv)
The
macro-economic policies and targets for 2004/05
52. Mr. Speaker, as I have stated above, the
agriculture sector has potential to create jobs to the majority of the
population if necessary steps are implemented to revolutionalise it. The
Government has done what is in its reach given the available resources, and it
is now the turn of the public and investors both local and foreign to respond
to develop this sector. Equally
important is manufacturing sector which has the potential to contribute to GDP
growth, employment creation, and exports.
Success will only be achieved through affirmative action towards
promoting economic growth. This budget
is therefore focusing on building further the foundation for small and medium
size enterprise sector businesses to grow and fill the obvious gap that exists
in the economy.
53. Mr. Speaker, all in all, success in economic
development and poverty eradication will only be achieved when we are able to
connect our country through infrastructure, involving roads, railway,
communication and energy. Second
we need to create capacity in professional competencies that are essential in
this era of globalization. Third,
given that, the majority of the people lives in rural areas and depend on
agriculture for their food supply and employment, it is crucial that our
strategy for raising agricultural output is more focused and create backward
and forward linkages with industry and commerce so that the sector is
transformed into a modern sector.
Perhaps we need to re-examine our priorities in order to determine areas
that we should focus on, for getting maximum return on the use of the meager
resources that we have. This could be
done by way of selecting a few areas first instead of spreading our little resource
base so widely without significant impact.
I would be happy to receive advice from Honourable Members of Parliament
on this idea during the deliberations of this budget proposal.
54. Mr. Speaker, this
Budget is a continuation of the programme of reform
of the third phase Government aimed at attaining the goals of the Vision 2025,
notably eradication of poverty. It is
aimed at consolidating the gains attained in macroeconomic stability, and
creating conditions for accelerating economic growth, enabling environment for
self employment, and self-prosperity and advancement. It provides equal opportunities for all to
improve their conditions for higher productivity especially in agriculture and
small scale businesses. It is an enabler
for those individuals who have taken the first step to self employment and self
economic empowerment to move forward by eliminating red tape, providing them
with guarantees so that they may be bankable and obtain credit from banks,
reducing the burden of tax, and cumbersome repetitive licensing requirements,
removing the hurdles of overregulation, and many others. It is envisaged that Honourable Ministers
will expound on these issues when they present their sector policies and
strategies and announce more sectoral measures to
enable Tanzanians to achieve self economic and social advancement. Mr. Speaker,
notwithstanding these measures, it should be noted that universally there is no
government that can deliver wealth and prosperity to households on a silver
plate. Wealth at household level is
created by the Household members while the wealth of a Nation is the aggregate
of the contributions of Households. The
Government will therefore continue to improve the conditions for enabling those
determined and eager to bring wealth to their families and the Nation as a
whole to do so. I am pretty sure that,
Honourable Members of Parliament understand what I am saying and I hope they
will support this budget through their individual votes.
55. Mr.
Speaker, I beg to move.