Budget draws mixed feelings from business community

Dar es Salaam. Members of the business community have expressed their diverse views about the Sh44.4 trillion budget, noting that the estimates presented solutions to investors on one side and introduced some challenging aspects.

Requesting the August House to endorse his budget, the Finance and Planning minister, Dr Mwigulu Nchemba, detailed a number of fiscal measures in the 2023/24 that the government will take to attract more investments, stimulate domestic production and discourage the importation of products that are also produced locally.

An audit firm, PwC, did an analysis and issued its National Budget Bulletin, noting that some groups will to some extent feel the pinch, including artisanal miners, who will now have to pay an income tax of two percent.

PwC reminds that “in the financial year 2021/22 the budget had proposed a similar introduction (albeit at a rate of three percent). Also, in last year’s budget speech, a proposal was made to introduce a two percent withholding tax on payments to small-scale miners. But neither of these proposals was included in the respective Finance Acts.” Dr Nchemba also proposed an excise duty rate of 20 percent on beer and tobacco products.

“This will be of significant concern to beer and cigarette manufacturers, especially with indications of more constrained demand in the first half of 2023 as compared to 2022,” states PwC.

“Although the rise is significant for beer and cigarette products, some of the businesses affected by the 10% increase, such as soft drink producers, will be concerned.”

Hopes of the banking sector for the budget to address certain pain points on income tax seem to have been dashed, according to PwC.

It says that of interest to the banking sector and the business community more generally will have been the section in the minister’s speech specifically addressing the challenges of US dollar liquidity and the commitment of the government to take specific measures in the short, medium, and long term to address this. On the imposition of excise duty that is now extended to cover cement at a rate of Sh20/kg, PwC notes that the stated purpose is to increase government revenue and reduce the effect of emission gases.

“This amendment will not only mean an increase in cement cost, but cement manufacturers will also face the existing challenges in the implementation of Electronic Tax Stamps (ETS), not least the very significant related costs (of stamps and equipment installation and operations of the system),” it says.

Mr Chuki Shabaan, chairperson of the Tanzania Truck Owners Association (TATOA), said that they thank God for any relief that occurs in their sector, but regarding the proposed taxing system, they will seek a dialogue with the government.

“There are many areas to get tax. The issue of ‘advance tax’ on us bothers me a lot because you have to pay it no matter if your vehicle is working or parked. That is why we are advising the government to remove this thing and instead add a Sh20 on fuel so that we can pay through that channel,” he said.

“This tax hurts people a lot, the government should change this system so that people can love and enjoy their work, If they put it in fuel, it is easy for us to pay it effectively,” added Mr Shabaan.

But, speaking on the budget, the Chairman of Tanzania’s Business Community (JWT), Khamis Livembe, said the budget that was read has brought great relief in doing business as it has tried to solve many challenges that were being complained about by businessmen.

“We know they cannot finish all of them at the same time, but if they continue like this every year, it will bring great relief. We have touched many areas, including the lack of business, the presence of many regulatory institutions, and challenges in the assessment of customs duties,” said Mr Livemba.

Dr Tobias Swai, Head, Department of Finance, University of Dar es Salaam, said the budget provided relief to encourage more investment in the country and safeguard locally produced products across East African countries through the EAC Common External Tariffs.

“Investors’ promotion is essential for job creation, especially for the Youth. The EAC Common External Tariffs provide relief for the importation of baby diapers, packaging materials and protection of local products,” he said.

For individuals, the budget provides excellent relief on land and landed properties from paying withholding tax on rental properties not used for commercial purposes, purchasing low-cost housing, and title deed fees. “What is needed here is to increase the speed and ability of the municipalities and Ministry of Lands to process the application and title deeds. Also, it is essential to reduce bureaucracy in the process,” noted Dr Swai.

The ruling party’s (CCM) general secretary, Mr Daniel Chongolo, mentioned three things that were obstacles for the people, but the 2023/24 budget has addressed them, including the order to close the businessmen before negotiating with businessmen, the lack of loans for mid-level colleges and the strengthening of industries.

He said the issue of closing the business of a debtor was an inhumane oppression and even caused many people to hate their government and CCM, “but now they see that relief has come.”