What to expect from today as Budget comes into effect

Dar es Salaam. You will start paying more on every litre of petroleum products that you buy starting today as authorities raise prices in response to changes brought about by the 2021/22 budget.

In line with the Sh36.68 trillion budget which was approved in Parliament last week, your costs on a litre of petrol and diesel will rise by Sh100 as the government seeks to collect money – including the Sh100 fuel levy – to finance its development and recurrent expenditure for the 2021/22 financial year.

With rising global prices, the Energy and Water Utilities Regulatory Authority (Ewura) said yesterday, actual rise in petroleum prices will be more than the Sh100 fuel levy.

“For July 2021, the retail prices of petrol, diesel and kerosene have increased by Sh156, Sh142 and Sh164 per litre, respectively,” Ewura said in a statement yesterday in reference to fuel imported via the Dar es Salaam Port. It added: “Apart from changes in Fuel Levy and Petroleum Fee, changes in local prices are also due to changes in the world oil market prices and BPS premiums”.

As for fuel imported via Tanga Port and destined for Tanga, Kilimanjaro, Arusha and Manyara regions, retail prices for petrol and diesel have increased by Sh135 and Sh16 per litre, respectively.

On the other hand, retail prices of petrol and diesel that’s been imported via Mtwara Port and destined for Mtwara, Lindi and Ruvuma regions have increased by 139/litre and Sh181/litre respectively.

The new prices mean that Dar es Salaam consumers will now pay Sh2,405, Sh2,215 and Sh2,121 for a litre of petrol, diesel and kerosene, respectively.

In northern regions, the prices will be Sh2,505, Sh2,301 and Sh2,205 for petrol, diesel and kerosene respectively.

Residents of Uvinza in Kigoma will pay the highest price where a litre of petrol will cost Sh2,649 while that of diesel and kerosene will cost Sh2,459 and Sh2,365 respectively.

Meanwhile, you will start paying a levy of between Sh5 and Sh186 for recharging your Sim card starting today as the new financial year starts.

Likewise, sending money through mobile phones will cost you more starting today as the government seeks to collect money to finance development and recurrent expenditure in line with the approved Sh36.68 trillion-budget for the financial year 2021/22.

In line with the law, the Bank of Tanzania (BoT) has declared today (July 1) to be a holiday for the banking sector whereby all banks will be closed for business.

The government is today officially implementing the 2021 Finance Act by, among others, imposing a levy of between Sh10 and Sh10,000 on each mobile money transaction of sending and withdrawing same.

The move, according to the Finance and Planning minister, Dr Mwigulu Nchemba, will see to the government increasing its revenue by Sh1.254 trillion.

Winding up the budget debate in Parliament last week, Dr Nchemba said it was important for the country to understand that Tanzania’s development rests on their shoulders - and, hence, the pressing need to deduct small amounts of money on a monthly basis from the amount that is spent on recharging their Sim cards.

“At first, MPs had not quite understood what the government intends to do with the Sim card levy… The money will be deducted on a monthly basis but they thought that if a person does not recharge their phones, the balance will be deducted the day they do so,” he clarified last week.

He noted, however, that eight million people who recharge their Sim cards with Sh1,000 worth of airtime will be deducted Sh5 only, while more than 60,000 people who spend from Sh100,000 upwards will pay only Sh222.

People recharging using Sh7000 and Sh10,000 will have Sh76 deducted, while those recharging with Sh10,000 and Sh25,000 will pay Sh112.

Those recharging using Sh50,000 monthly will pay Sh186.

He said it was high time Tanzanians accepted that they have the noble obligation of contributing to their country’s development.

“The country will be built by Tanzanians because it is their responsibility,” he said.

Tanzania has major strategic projects that need trillions of shillings, including the Standard Gauge Railway, the Julius Nyerere Hydro Power station and roads, among other projects, he said - adding that it would be imprudent to take loans for them, thereby leaving a huge burden for future generations.

It is also today that Tanzanians will start using the ‘Luku’ system to expeditiously pay property tax.

According to Dr Nchemba, the government has programmed the property tax system in such a way that it is only bona fide property owners who will pay the tax.

“The Energy minister has assured us that with the programming, the government can know a house with more than a meter, the usage trend and who ought to pay,” he said in clarification on fears that some tenants could end up paying the tax on behalf of their landlords.

On the question of poor road networks - especially in rural areas - Dr Nchemba said the government would invest some Sh322 billion into the construction of roads in areas which are currently impassable. This is in addition to the Sh400 billion that was approved for the Tanzania Rural and Urban Roads Agency (Tarura) budget which would be used for spot and periodic maintenance.

Dr Nchemba said the government will loan Sh70 billion to 21,000 students who failed to join university because they didn’t get loans from the Students Loans Board and whose parents have no money. Some 11,000 students missed loans last year, with another 10,000 doing so this year.

Also, starting today, operators of mineral refineries will start smiling as the government scraps VAT on precious metals and mineral concentrates that are brought into the country for processing.

Insurance on livestock services will no longer attract VAT starting today - and, so,will be artificial turf as the government seeks to promote the construction of quality sporting facilities in the country.

Tanzanians will now start buying solar lights free of VAT.

Investors in government securities will also have reason to smile as the government is exempting income tax on interest income derived government bonds.

In the same effort of stimulating industrial production amid the viral Covid-19 pandemic, the government avoided the allure of making excise duty adjustments to non-petroleum products.

This means that prices of beer, soft drinks, cigarettes, wines and spirits will for all practical purposes remain the same.

Manufacturers should expect some relief starting from today as the approved budget comes with a number of import duty incentives that are designed and intended to promote local production.

For instance, to promote the growth of local leather industries, the government is granting a duty remission of zero percent rate instead of the 25 and 10 percent that was on raw materials for leather processing.

Among other things, the government is bringing down electrical inspection, electrical insulation test and general inspection fee from Sh590,000 to Sh150,000 which was being charged by the Occupational Safety and Health Authority (Osha).

In an effort to boost financial inclusion, the government is scraping VAT on all smartphones, tablets and modems.

Doing this by the government is meant to promote usage of data services across the country in order to attain the target of 80 percent users of Internet services by 2025, against the current 46 percent users in the country.