FINANCE and Planning Minister Dr Philip Mpango yesterday unveiled the national 2016/17 budget, entailing a 29.5 trillion

The Fifth Phase Government (FPG) is determined to increase and strengthen domestic revenue collections through all available means,” emphasised Dr Mpango in his 105-page speech.
He told the House that the government’s drive to curb wasteful spending in the public sector goes in tandem with reinforcement of anti-corruption efforts and establishment of the special corruption and economic crimes court.
According to the minister, the government has allocated 2.5bn/- for the establishment of the court as well as 72.3bn/- for the Prevention and Combatting of Corruption Bureau’s anti-corruption operations.
The minister stressed the effective use of electronic systems and devices to increase efficiency in revenue collection, citing formalisation of the informal sector as the main strategy to widen the tax base.
He directed all traders in the country to acquire and effectively use the Electronic Fiscal Devices (EFDs) in their business transactions or risk stern legal measures. “I urge all businessmen to start using EFDs with immediate effect or else legal actions will be taken against them,” charged the minister, mentioning some of the penalties for non-use of EFDs as forfeiture of business licences and ban from operating in the country.
Dr Mpango prohibited all ministries, independent departments, agencies, local government authorities and public institutions from dealing with suppliers and service providers by not using the EFDs, effective July 1, this year.
Under the new directive, no public money can be spent without being supported by EFD generated invoice and receipt. “The government will during the 2016/17 fiscal year continue to prudently manage the use of public funds as per existing laws and other directives ... the aim is to control expenditure, leakages and misappropriation of public funds,” said the minister, noting that more preference will be on development projects.
Dr Mpango noted that the government plans to table under certificate of agency the amendments of the Public Procurement Act, 2011, with the view of fixing loopholes that support misuse of public funds.
He directed government institutions to procure services like insurance, courier, transport and advertisements from public providers, saying “The government seeks to control expenditure without compromising the quality of service delivery.”
The use of bulk procurement of vehicles and direct purchase from manufacturers as well as minimisation of expenditures on unnecessary issues like national ceremonies, foreign travels, sitting allowances, printing of T-Shirts, caps, bags, diaries and calendars are some of the government austerity measures under the new budget.
Meanwhile, the government has introduced sweeping tax reforms for the 2016/2017 fiscal year with increment of duties on soft, alcoholic drinks and cigarettes while maintaining the current levels of taxes and levies on fuel towards price and economic stability.
Dr Mpango, however, seemed to have touched the raw nerves of parliamentarians when he announced the removal of tax exemptions on gratuity to the lawmakers in order to promote equity and fairness in taxation.
In a related development, the minister abolished tax exemptions granted to armed forces’ shops and canteens which he said have been abused by some individuals at the expense of servicemen and women.
“The management of the exemptions has faced some challenges including abuse. The East African partner states are no longer providing such exceptions save for Tanzania and Rwanda,” the minister said when presenting the estimates yesterday evening.
He, however, proposed that members of the armed forces should be provided with allowances to enable the men and women in uniform to procure goods according to their preferences. The new tax reforms, according to Dr Mpango, will enhance revenue collection systems, administration and promote voluntary compliance.
On the other hand, as pledged by President John Magufuli during the Workers’ Day on May 1, this year, Dr Mpango announced reduction of Pay As You Earn (PAYE) tax from the current 11 to 9 per cent.
“In essence, the government has been reducing PAYE from 18.5 per cent in 2006/2007 to 9 per cent which is being proposed for the next financial year,” he explained. Dr Mpango as well reduced Skills and Development Levy (SDL) and effective administration of its execution.
The minister said the government has allocated 11.8 trillion/-, which is 40 per cent of the entire 2016/17 national budget, to fund the huge development projects, which have great potentials of stimulating the country’s economic growth.
The major industrial projects that the government has in pipeline include the revival of Arusha-based General Tyre, the Soda Ash at Engaruka Valley and development of small industries under Small Industries Development Organisation in Mwanza, Dar es Salaam, Mbeya and Morogoro regions.
The government will also in the coming fiscal year direct substantial resources to education and health as a strategy to integrate economic and human resource development.
Improvement of systems, buildings and other infrastructure at pre-primary, primary and secondary schools, as well as expansion and construction of universities, renovations and expansion of teachers’ colleges and vocational training centres are among the beneficiaries under the plan.
The plan, Dr Mpango said, will involve implementation of huge development projects under the PPP arrangement to reinforce the participation of the private sector. The Kurasini-based Tanzania-China Logistic Centre, Liganga Iron Ore and Mchuchuma Coal projects as well as Dar es Salaam-Chalinze-Morogoro Expressway are some of the projects earmarked under the envisaged PPPs.
Giving the 2016 national economic trend, Dr Mpango said the real national income is forecast to grow by 7.2 per cent, from last year’s 7.0 per cent, with inflation controlled at single digit of between five and eight per cent.
Domestic revenues, including councils’ sources, are expected to grow to 16.9 per cent of the country’s gross domestic product in 2016/17, from the 2015/16 fiscal year’s 14.8 per cent while tax revenues are pegged at 13.8 per cent of GDP in 2016/17 from the previous year’s 12.6 per cent.
The minister cited Nyerere, Maligisu, Nangoo, Mbutu and Ruhekei bridges; construction of the 542 kilometre gas pipeline from Mtwara to Dar es Salaam; two gas processing plants at Madimba and Songosongo; Lower Luvu water project and the 1,160 water projects, as some of the achievements under the 2015/16 development plan execution.
Other projects under the priority areas - infrastructure, agriculture, industries, human resource development, tourism, financial service and commerce - are still at different stages of implementation, said the minister.