CTI HIGHLIGHTS/COMMENTS ON THE GOVERNMENT BUDGET SPEECH FOR 2022/2023 DELIVERED ON 14TH JUNE, 2022
Dar es Salaam, Thursday 16 June, 2022
1.0 Introduction
The 6th phase-Government has just tabled its national budget for 2022/2023. In our view the budget expresses Government’s strong commitment to further accelerate economic recovery and enhance the productive sector for improved livelihoods of Tanzanian.
The budget speech has clearly stipulated government intentions to ensure sound revenue and expenditure policies enforcing value for money, fight against corruption and investing in productive sectors so as to create more jobs for youth which underlines the importance of the Private Sector for successful implementation of this task.
The Confederation of Tanzania Industries (CTI) commends the Government for tabling a balanced budget and wish to assure the government of its commitment and support in facilitating successful attainment of a vibrant economy anvisaged in the Five-Year Development Plan 2021-2026 and the National Development Vision 2025.
CTI and its members wish to take this opportunity to commend the 6th Phase Government under the leadership of HE. Samia Suluhu Hassan President of the United Republic of Tanzania and the Minister for Finance and Planning, Hon. Dr. Mwigulu Nchemba (MP), and the Government in general for a very positive budget.
2.0 CTI applauds the Government for taking various reforms in the Tax Structure, Fees, levies and amendment of laws and regulation to improve business environment as follow:
2.1 Value Added Tax (VAT)
• Zero rate Value Added Tax on double refined edible oil manufactured locally for one year.
• Exempt Value Added Tax on Agro-net HS Code 56.08.
• Zero rate Value Added Tax on fertilizer manufactured locally for one year.
• Exempt Value Added Tax on inputs for the local manufacture of gas cylinder.
2.2 Excise Duty
• Maintaining specific excise duty rates for all non-petroleum products (soft drinks, cigarettes, beer, wine etc.).
2.3 Other fees and charges of Agencies, Departments and Agencies (MDAs)
• Reduce the Workers Compensation Fund contribution rate from 0.6% to 0.5% for private sector
• Reduce radiation test fee from 0.2 percent of FOB to 0.1 percent of FOB on exports of food chain materials including fertilizers, tobacco and tobacco products, and imported relief food.
• Reduce TBS batch certification fee on imported sugar from shilling 6 per kilogram to 2.5 shilling per kilogram
• Implementation of BLUEPRINT for Regulatory Reforms to improve the Business Environment by amending Various laws and regulations
• Abolish Occupational Safety and Health Authority (OSHA) peak expiratory of 10,000 shillings and flow test fee of 25,000 shillings.
2.4 The East African Community Customs Management Act, 2004
• Continue to grant duty remission at a rate of 10% instead of 35% on imported wheat grain under HS Codes 1001.99.10 and 1001.99.90.
• Revert back to EAC CET rate of 0% instead of 25% on Crude Palm Oil (CPO) under HS Code 1511.10.00.
• Stay of application of EAC CET rate of 35% and apply a duty rate of 25% or USD 500/MT whichever is higher for one year on semi-refined and refined vegetable oils.
• Stay of application of EAC CET rate of 25% and apply a duty rate of 35% for one year on baby diapers under HS Code 9619.00.90.
• Grant duty remission at a duty rate of 0% instead of 10% for one year on raw materials under HS Codes 1901.90.10; 3302.10.00; and 3505.10.00 used to manufacture food flavors.
• Grant duty remission at a duty rate of 0% instead of 10% on paper used to manufacture corrugated boxes
• Grant duty remission at a duty rate of 0% instead of 10% for one year on inputs under HS Codes 7005.10.00; 7005.21.00; 7005.29.00; and 7005.30.00 used to manufacture toughened glass.
• Grant duty remission at a duty rate of 10% instead of 25% for one year on inputs under HS Code 3401.20.10 used to manufacture soap.
• Continue to grant duty remission at a duty rate of 0% instead of 25% or 10% on raw materials used to manufacture baby diapers
• Continue to grant stay of application of EAC CET rate of 10% and apply a duty rate of 25% on the paper and paper products locally manufactured under HS Code 4804.29.00.
• Continue to grant duty remission at a rate of 0% instead of 25% on Printed Aluminum Barrier Laminates (ABL) under HS Code 3920.10.90.
• Continue to grant duty remission at a rate of 0% instead of 10% on Refined Bleached Deodorized (RBD) Palm Stearin under HS Code 1511.90.40.
• Continue grant duty remission on raw materials and industrial inputs used to manufacture textiles and footwear
• Continue to grant Stay of application of the EAC CET rate of 10% and apply a duty rate of 0% for one year on Wires of other alloy steel under HS Codes 7229.20.00 and 7229.90.00 in order to reduce the costs of these inputs used by local manufacturers;
• Continue to grant duty remission at a duty rate of 0% instead of 10% for one year on organic surface-active agents (Anionic) LABSA under HS Code 3402.11.00 used by manufacturers of detergents and liquid soaps.
• Continue to grant duty remission of 10% instead of 25% for one year on CKD for three-wheel motorcycle excluding chassis and its components under HS Code 8704.21.90.
• Stay of application of EAC CET rate of 10% and apply a duty rate of 10% or USD125/MT whichever is higher for one year on flat-rolled products under HS Codes 7212.20.00 and 7226.99.00.
• Continue to grant stay of application of the EAC CET rate of 100 % or $ 460/MT whichever is higher and apply a duty rate of 10% for one year on refined white sugar (sugar for industrial use) under HS Code 1701.99.10.
CTI comment:
The above tax measures will enable domestic industries to reduce the cost of production, improve consumer welfare, promote the use of local materials, enhance competitiveness and stimulate economic growth.
3.0 Areas Requiring Further Government Consideration:
While we applaud the above measures, we would like to highlight areas that could negatively impact industrial development in the country and wish to request the Government to reconsider the following measures as follows:
• Stay of application of EAC CET rate of 10% and apply a duty rate of 25% for one year on cotton yarn under heading 52.05; 52.06; and 52.07 except subheading 5205.23.00.
• Impose excise duty at the rate of shilling 500 per kilogram on locally manufactured sugar confectionery and shilling 700 per Kg on imported sugar confectionery with HS Code HS Code 1806.31, 1806.31,1806.31 (chocolate); 1905.31 (biscuits) and 1704 (chewing gum).
• To protect domestic industries from undervaluation of imported finished Iron and Steel products, CTI still recommends that the government should stay application of 25% or USD 250 and instead apply 35% or USD 350 per MT whichever is higher on imported iron and steel products
4.0 Key priority areas of the budget for industrial development and the economic growth to be implemented during the 2022/2023 budget
We are delighted and wish to commend the 6th Phase Government for focusing on priority areas that are aimed at realising competitiveness of industrial sector.
The key fiscal policies and the priority areas for industrial growth stipulated in the budget in 2022/2023 include:
• Increase and strengthening government revenue collection,
• Fighting against corruption
• Strengthen use of ICT systems in tax estimation and Government electronic Payment Gateway (GePG)
• Free education from Primary school level to High school level.
• Continue improving business environment and open up more opportunities for the private sector
• The Government plans to continue establishing one stop centers to ensure all requirements for business services are available at one area
• Minimizing the government expenditure
• Increase budget in productive sector like agriculture, livestock, fisheries etc. to create employment to youth,
• The financial sector the government will continue to provide loans to businesses in different sectors of the economy
• Energy sector the government will continue with generation, transmission and distribution as well construction of Julius Nyerere Hydropower Project - 2,115 MW; Pipeline construction project of East African Crude Oil Pipeline (EACOP) from Hoima- Uganda to Tanga-Tanzania and the project to process and distribute natural gas
• Construction of the Central Corridor Standard Gauge Railway (SGR), road and bridges
• Continue to improve ports to facilitate economic activities, water transport and deep-sea fishing
• Continued to strengthen Air Tanzania
5.0 The 2022/2023 Budget
Tabling the Government budget for the Fiscal Year 2022/2023 in Dodoma on Tuesday, the Minister for Finance and Planning Hon. Dr. Mwigulu L. Nchemba (MP) said that a total of 41.48 trillion shillings will be mobilized and spent in 2022/2023 compared to 37.99 trillion shillings budget for 2021/2022, which is an increase of approximately 9.5%.
The total domestic revenue (including LGAs own sources) is estimated at 28.02 trillion shillings, Equivalent to 67.5 percent of the total budget.
The Government plans to collect tax revenue amounting to 23.65 trillion shillings and non-tax revenue (collected by Ministries, Departments, Institutions and Local Government Authorities) estimated at 4.37 trillion shillings.
6.0 Conclusion:
CTI is optimistic that if executed properly the 2022/2023 budget will significantly support the initiatives taken by the Government to build a sustainable industrial economy and CTI is committed to continue working hand in hand with the 6th Phase-Government to achieve the set social economic goals.
CTI Secretariat
P O Box 71783
Dar es Salaam
Tel: 2114954/ 213802/ 2130327
E-mail: cti@cti.co.tz