Pro-growth budget

THE government has hiked taxes on beers, cigarettes and gambling machines and increased road and fuel tolls to raise additional revenue and promote growth.

Presenting government budget estimates for 2023/24 financial year in the National Assembly on Thursday, the Minister for Finance and Planning, Dr Mwigulu Nchemba said road and fuel tolls would be increased by 100/- per each litre of petrol and diesel and the funds obtained will be channeled for strategic projects.

He said excise duty on beers and tobacco products would be increased by 20 per cent and duty rates for non-petroleum products would be increased by 10 per cent.

The minister said the government intends to raise Value Added Tax (VAT) registration threshold from 100m/- to 200m/- and gradually increase it to 500m/- to enhance administrative efficiency and promote voluntary tax compliance.

He said the government would also extend Value Added Tax (VAT) exemption on sale and lease of aircraft, aircraft engine or parts by a local operator of air transportation.

The government also intends to introduce an excise duty rate of 30 per cent to cigarettes and other tobacco products including water tobacco, electronic cigarettes, vape products and shisha and increase excise duty rate on imported energy drinks from 589.05 to 600/- per litre.

The Finance Minister said the government intends to introduce excise duty at the rate of 20 per cent on imported and domestically manufactured gambling machines and increase gaming levy from 10,000/- to 30,000/- per slot machine in bar sites (clubs/places selling liquor).

It has also planned to reduce the tax rate from 25 per cent to 18 per cent on gross gaming revenue (GGR) for Forty Machines Site operations.

Other measures will be to introduce excise duty at the rate of 20/- per kilogram of imported and domestically manufactured cement.

The government also plans to introduce an excise duty rate of 5 per cent on electric motor vehicles, with engine capacity of more than 1000cc.

Looking to promote local businesses, the government has proposed that regulatory authorities will from 1st July, 2023 be prohibited from suspending business operations due to violation of various legislations.

And as part of measures to promote local manufactures the government plans to exempt Value Added Tax (VAT) on inputs used to manufacture insecticides and acaricides, the minister said.

The government plans VAT deferment on domestically manufactured capital goods in the list of capital goods that qualify for deferment, he said.

According to Dr Nchemba the government will zero rate Value Added Tax (VAT) on textiles products manufactured using domestically produced cotton for a period of one year.

It also plans to exempt Value Added Tax on supply of precious metals, gemstones and other precious stones at buying centres, mineral markets and Gem houses designated by the Mining Commission under the Mining Act or refinery situated in Mainland Tanzania.

The government has increased expenditure by 7.0 per cent to 44.39tri/- in the next financial year, up from 41.48 in the current financial year to shore up the economy against the fallout of the war in Ukraine and the continued aftermath of the coronavirus pandemic.

The lion’’s share of the budget would be financed by domestic revenue estimated to reach 31.38tri/- or about 70.7 per cent of the total budget.

Other sources will be grants and concessional loans from development partners estimated to reach about 5.47tri/- or 12.3 per cent of the total budget.

The government also expects to borrow 2.10tri/- from non-concessional sources for the purpose of accelerating implementation of development projects.