TPSF calls for long-term Fiscal Policy to spur Industrial Growth

The Tanzania Private Sector Foundation (TPSF) has asked the government to establish long term fiscal policy that will last for at least four years, if the country is to achieve its envisaged industrial economy.

TPSF is confident that a long term fiscal policy will attract more investments and assist to minimize complaints from business community on revenue collections and will attract more investment

Long-term fiscal policy will also enable the country to have a revenue policy that is sustainable and predictable, complementing government’s efforts on improving business climate. Such policies are important for business to better engage in long term planning on aspects such as expansion and future investments.

TPSF in February held a validation meeting with stakeholders to validate fiscal policy recommendations previously gathered by the foundation. Multiple issues were raised by TPSF members and business community at large from cross cutting issues such as the reduction of worker’s compensation fund contribution to 0.5% from 1%, to elimination of multiple regulatory charges. The private sector is also calling on the government to settle refund claims of VAT and the additional 15% import duty on industrial sugar.

In the agriculture sector recommendations have been made to boost local production and manufacturing by introducing VAT on imported packaged material, hermetically-sealed bags, plant protection substances in horticulture, post harvest equipment among many others.

Since the validation workshop, TPSF has submitted the proposed recommendations to the Ministry of Finance and Planning and is currently coordinating the private sector participation in Task Force for Tax Reforms. Following the Task Force the Think Tank is expected to convene before Financial Budget 2019/20.

“We need policy that will be used as guidance for at least three or four years, enabling business community to predict the taxes to be paid for the given period instead of discussing the changes in every fiscal year,”-Godfrey Simbeye

Most businesses are of the sentiments that it’s not easy for the government and business community to implement changes that are made every year.

The private sector is proposing some of the below changes on the coming budget (2019/2020) for smooth business operation and hence industrial growth.

Introduce specific import duty of $3 per kg of imported textile and garment
freezing Excise Duty for Non-Petroleum Products
Remove the additional 15% import duty on industrial sugar
Reduce the prices on electronic tax stamps on cigarettes to match the price of old tax stamp of $4.77/1,000 tax stamp and also other products to reduce the burden on consumers and manufacturers.
Charge lesser ETS price on locally produced products using at least 75% of locally sourced materials
Abolish section 76(4) of the Tax Administration Act 2015.
Exempt VAT on all insurance services.
Late payment interest on tax under dispute resolution process
Increase agricultural budget allocation to 10%
Exempt VAT on raw materials such as cotton, soya and sunflower meal (mashudu) used to manufacture animal feed
Removal of import duty and VAT on imported animal feeds and feed additives
Exempt VAT on Locally produced edible oil and seed cake from domestically grown seed (sunflower and cotton).
VAT Zero rating on Milk produce
Increase the License fee for importing milk from Tshs 150 per litre to Tshs 2,000 per litre
Exempt VAT on imported packaging materials for tertiary processing (roast and ground, instant making coffee)

Major achievements from recommendations submitted by TPSF in 2018/19 cycle included;

Reduction of corporate income tax rate from 30% to 20% for new investors in the pharmaceutical and leather industries for five years from 2018/2019 to 2022/2023.
VAT exemption on packaging materials produced for use by local manufacturers of pharmaceutical products; Imported animal and poultry feeds additives
Freezing the excise duty for locally produced non-petroleum products to stimulate consumption
Abolishment of multiple fees and levies in the salt sub sector