Minister for Finance and Economic Affairs, Mr Mustafa Mkulo, displays his budget briefcase before presenting the 2010/2011 budget at the parliamentary ground in Dodoma Tanzania. Picture by Leonard Magomba
Tanzania’s budget has been described as a catalyst for economic recovery that will please many and offend a few. Analysts said Finance and Economic Affairs minister Mustafa Mkulo’s budget, presented in Dodoma, addressed the expectations of a wide cross-section of people affected by the global economic crisis. Mkulo introduced a number of tax incentives to boost agriculture and manufacturing. Spending on social services, namely health and education, and on infrastructure and agriculture were increased. These four sectors were allocated Sh5.6 trillion — 50 per cent of the total Budget. Herwig Polders, a tax director with Deloitte Consulting Ltd, said this is a continuation of a trend set five years ago by President Jakaya Kikwete’s government. “Overall, the 2010/11 budget will please many and offend a few. In many ways, it is clear that government has listened to stakeholders. The Budget has introduced some commendable measures to curb spending and stimulate investment in the economy,” Mr Polders said yesterday. Dr Haji Semboja of University of Dar es Salaam’s Economics department said the budget tries to restore economic growth following a slowdown resulting from the global economic crisis. Huge spending He said that the huge spending on health, education and infrastructure will help improve standards of living. “This Budget takes into consideration the plight of low income earners... it could be government’s reaction to increasing complaints about the high cost of living,” he said. To boost agriculture, the government introduced some tax exemptions, with the most notable being the scrapping of Value Added Tax on transportation of agricultural products and equipment such as combine harvesters, pick-up balers, hay making machinery and mowers used in agricultural production and livestock. The government is also granting VAT exemption on equipment used in the collection, transportation and processing of milk products to promote investment in the dairy sub-sector. The government also granted special VAT relief in the supply of goods and services to organised farms and those falling under registered cooperatives unions. Special VAT relief on building materials and construction services to EPZ developers was also granted. The government also refrained from increasing fuel taxes. Income tax for individuals was reduced from 15 per cent to 14 per cent. Despite meeting people’s expectations, the 2010/11 Budget will achieve its objectives only if it will be implemented effectively, commentators said. Ignored peasants But Prof Marjorie Mbilinyi, an activist with the Dar es Salaam-based Tanzania Gender Networking Programme faulted Mr Mkulo’s proposals, saying they ignored the peasants. “The government is bending over backwards to meet the demands of agribusiness and other large-scale producers. How will this benefit the small-scale producer or the low-income consumer? “Will there be price controls and/or subsidies to ensure that poor households can afford basic foodstuffs?” she asked.
