Govt set to abolish nuisance taxes imposed on businesses

The President of United Republic of Tanzania  Dr. John Joseph Pombe Magufuli

THE Finance and Planning Minister Dr Philip Mpango recently announced government plans to abolish nuisance taxes imposed on various businesses to unleash the potential of Small and Medium Enterprises (SMEs).

Speaking to the business community in Dar es Salaam recently, Dr Mpango pointed out that the plan to axe the unnecessary levies will be realized during the 2016/17 fiscal year.

He expressed his disapproval of the taxes, saying they are not friendly to the country’s development vision with the view of transforming the country into a middle class economy.

He, however, did not go into specific on which taxes in particular will be abolished but the minister cited the cashew-nut sub-sector, saying that he has been informed by legislator from cashew-nut growing area that there are 27 taxes charged on the crop.

“I was told by one of the legislators from cashew-nut producing areas that the crop has about 27 nuisance taxes. This is not acceptable of we are to empower our people and become a middle class economy” he said.

According to him, councils have been directed to submit their tax regimes to a tax force made up of government officials and members from the private sector has worked out on ways to get rid of unnecessary levies.

“We have already received the team’s report and currently we are working on it, their recommendations will be considered when preparing the coming budget. For instance, in the aviation industry, there have been calls to re-examine value added tax (VAT), insurance and withholding tax, we will work on such suggestions” he said.

“Improving investment and business climate is the best way for a developing country to boost growth, increase government revenue and fight poverty. To do so, we ought to invest in improving government administration (increase efficiency, increase transparency, eliminate corruption), develop a simple and predictable tax regime, investing in public and social infrastructures” he added.

The minister told the business community that since tax exemptions are not the best tools to efficiently achieve such results, the coming budget will also deal with the matter.

“We need each other, so we should work and transact our businesses in a manner that is beneficial to general public” he further said.

Dr Mpango used the occasion to unveil government flagship projects for the 2016/17 financial year whereby one of the priorities is the construction of iron ore and coal mines in Mchuchuma and Liganga located in Mbeya Region.

Other flagship projects include the use of public private partnership (PPP) model to revive defunct privatized industries that are yet to be repossessed by the government as well as the construction of the central railway to the international standard (standard gauge railway).

Felix Mosha, the Chairperson of the Policy and Advisory Committee of Tanzania Private Sector Foundation (TPSF), said the government should work hard to restore investors’ trust and commitment but at the same time protect local investors.

“The government should empower local businesses by creating a window within the ministry that would tap various businesses opportunities within SADC and East Africa member states, we should also make sure we empower the agriculture sector as stated in the Maputo declaration, investment in agriculture is shrinking” he explained.

SOURCE: The Guardian