Revenue collection will exceed 8.19tri/- during this fiscal year compared to over 6.51tri/- earned in 2011/12 following review of tax exemptions as recommended by Members of Parliament (MPs).

Finance and Economic Affairs Minister Dr William Mgimwa

The Minister for Finance and Economic Affairs, Dr William Mgimwa, told the National Assembly  that tax revenue will reach 8.7tri/- and non-tax revenue was projected at 124.42bn/-.

“Tax collection will continue improving during this financial year because of different policies and administrative measures for both tax and non tax revenue,” Dr Mgimwa said. The Tanzania Revenue Authority (TRA) would soon complete  establishment of an international taxation unit to deal with multinational corporations operating in the country.

“We will also improve capacity and monitoring of special sectors including minerals, communication, tourism, banking, and oil and gas,” the minister said. Dr Mgimwa said TRA surpassed revenue collection targets by 104.5 per cent for tax revenue and 103.9 per cent for non tax revenue because of its third five-year strategic plan.

“TRA will now continue strengthening the use of electronic payment system which include increasing coverage of electronic fiscal device (EFD) to issue tax receipts,” Dr Mgimwa noted. He said TRA was preparing a second five-year revenue mobilisation strategy and the fourth corporate strategy whose implementation would start in July 2013.

The government expects to receive over 3.15trn/- external funds through loans, grants and aid.  Lawmakers deplored government’s continued dependence of foreign aid while exemptions skyrocket demanding  a target of one per cent of gross domestic product (GDP) as advised by the Parliamentary Finance and Economic Affairs Committee last year.

“The committee emphasizes that the government should continue to increase domestic revenue collection by revisiting tax exemptions so that they should not exceed one per cent of GDP,” said Vice-Chairman of the committee, Mr Dunstan Kitandula.

Mr Kitandula (Mkinga -CCM) said while in neighbouring countries of Kenya, Mozambique and Uganda exemptions were not more than one per cent of their GDP, the government has been adamant to reduce its three per cent regular figure since 2010/11 fiscal year.

“In the next Finance Bill, the committee expects to see these changes as the government shows a clear commitment to get rid of unnecessary tax exemptions,” Mr Kitandula noted.

Opposition Shadow Finance Minister, Mr Zitto Kabwe (Kigoma North Chadema) said Treasury should ensure that TRA develops capacity to monitor and identify tax sources within mining, telecommunications, oil and gas production companies many of which evade taxes.

“The official opposition in parliament would like to urge TRA to work closely with Tanzania Communications Regulatory Authority (TCRA) to audit revenue accounts of telecommunications companies and mobile phone value adding products companies,” Mr Kabwe said.

He urged lawmakers to rally behind struggling local artistes whose music is used as ring tones in mobile phones with an annual turnover of over 43bn/- but of which the former earn a paltry seven per cent royalty.

By FINNIGAN WA SIMBEYE, Tanzania Daily News