On 14 June 2018, Tanzania’s Minister for Finance and Economic Planning presented the country’s 2018/19 budget. The theme of the budget “to build an industrial economy that will stimulate employment and sustainable social welfare.” has been prepared in accordance with the Tanzania Development Vision 2025 (eradicating poverty, transforming Tanzania into an industrial economy and endeavouring to be a middle-income country by 2025). However, accounting firm Ernst & Young doubts the feasibility of this budget.
The global professional services firm has questioned the effectiveness of Tanzania’s fiscal year 2018/19 budget on whether it can meet the demands of the country. The service providers’ company held a meeting with economists and bankers to evaluate the country’s budget and whether it will deliver the expectations of the public.
The London based firm probed the state of the East African country’s backbone and the budget allocated to the sector. E&Y questioned the allocated budget for agriculture budget given it is the country’s major support system, E&Y proposes that finances be allocated to the sector to fully support the economy.
Ernst & Young is not the only firm laying out complains as various other firms and individuals have castigated the government on the low allocation to the agricultural sector saying it will have a ripple effect on every other sector.
The argument is support for local industry. It was stated that the local industry has suffered setbacks due to the dominance of foreign investments that have been welcomed courtesy of the business incentives the Government grant them. Should the government allocate more funds for the sector, the standard and quality of local content to both domestic and international market would increase
According to the budget framework, the government domestic revenue estimated for 2018/19 amounts to TZS20.89 trillion of which TZS18 trillion is from tax revenue, TZS2.16 trillion represents non-tax revenue and TZS735.6 billion will be from the Local Government Authority (LGA).
Tax reforms in the new budget hope to increase the revenue collected by the Government to fund other developing projects. Meanwhile, SME’s have been injured and most crippled by increased taxes imposed on them. According the 2018/2019 budget, the formation of a wider tax base would ease the burden off their shoulders and ensure the tax authorities collect massively without straining businesses in the country.