Tanzanian Manufacturers Get a Reprieve From Levies

Tanzania has abolished several taxes imposed on locally made products, but increased levies and duty on service sectors and some imported goods, to cushion local manufacturers from competition.

Finance Minister Dr Phillip Mpango, in the 2019/20 budget speech, said the government would amend duty rates for non-petroleum products to reduce the tax burden on industry.

But Dr Mpango raised registration fees for vehicles, motorcycles and rickshaw tricycles, saying the government is looking to raise Tsh18.1 billion ($ 8 million). Driving licence fees were raised from Tsh40,000 ($17) to Tsh70,000 ($30), and the percentage of duty on artificial hair and plastic also rose.

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In May, President John Magufuli said the government is more focused on economic and infrastructure projects than on salary increases.

Critics say the budget is not pro-poor, because it does not touch on wages and salaries.

ACT Wazalendo party leader Zitto Kabwe said the budget was concerned by the government’s focus on mega projects when it should have directed more funds to social services, mostly education, health and water supply.

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To opposition Member of Parliament Ruth Mollel, the budget neglected employees in both state and non-state institutions whose PAYE payments remain the most notable contributor to the government coffers.

Major projects earmarked for generous budget allocations include the standard gauge railway, the Rufiji Hydropower Project, the revival of Air Tanzania Company Ltd, and tarmacking key roads in Dar es Salaam.

The government is also looking to attract investors in manufacturing and raise the industrial contribution to the national economy from the current seven per cent to 15 per cent in the next six years.

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Under the Tanzania Development Vision 2025, the government had set a target for speeding up industrial revolution.

Dr Mpango said the focus will be on industries that utilise local raw materials, developing industrial parks, special economic zones and strengthening research centres.

He added that large enterprises will be exempted from the Tsh2.4 million ($1,000) maintenance fee imposed on a factory, and Tsh575,000 ($250) imposed on SMEs.

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