Dar es Salaam: Minister for finance and Planning Dr Phillip Mpango has tabled the proposed Sh32 trillion ($14 billion) 2018/19 revenue and expenditure estimates of which dwelled on protecting local producers while announcing tax incentives for key priority areas.
Tabling the proposal in Dodoma on Thursday, Dr Mpango said the new budget is also aimed at broadening tax base, harnessing rural electrification, strengthening existing sources of income through formalization of informal businesses and protecting local manufacturers.
Out of proposed budget Sh20 trillion (nearly $9 billion) will be recurrent expenditure, Sh10 trillion (nearly $5 billion) on debt services and Sh12 trillion ($5.5 billion) will be spent on development expenditures.
The government is expected to borrow Sh8 trillion (nearly $3.5 billion) from both local and external sources.
Winners of the new proposed budgets including youths and women of which will be allocated with 10 per cent of all local government own revenue, local producers of goods and services, new local investors.
He said the new budget will help to narrow tax base whereby the ratio of domestic revenue to GDP is almost 15.0 per cent compared with 17.0 per cent for Sub-Saharan African Countries.
Other measures to improve business environment according to minister Mpango will be improving infrastructures and smooth tax compliance, reduce red tapes in paying taxes, as all together will increase business transactions.
He said the new proposed budget will also improve relationship between tax authority and taxpayers as well as boosting revenue generation from local government authorities and job creation.
Priority areas for the proposed 2018/19 budget include increasing access to electricity, improving rail transport, improving roads infrastructure as well as improving water and air transport.
Proposed tax incentives include remove of Value Added Tax (VAT) on pharmaceutical packaging materials, animal and poultry feeds raw materials, women sanitary pads and reduce corporate income tax from 30 per cent to 20 per cent in the next five years for new investors on skins and pharmaceutical manufacturers.
He has also proposed tax exemptions for public projects financed by concessional loans.
The minister said there will be no tax changes for sin industries manufactured locally including water, fruits juices, alcoholic beer, non-alcoholic beer, wine, whisky, cigarettes and other tobacco products.
Macroeconomic targets for 2018/19 budget will be to attain real GDP growth of 7.2 percent in 2018 up from the actual growth of 7.1 percent in 2017, contain inflation at single digit and increasing revenue to 13.6 percent of GDP in 2018/19 from 13 per cent in 2017/18.
Mnaku Mbani is a Business reporter based in Dar es Salaam, Tanzania.
The expressions in this article are the sole responsibility of the author and do not necessarily reflect those of ooreporters.com.
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