Monday, August 4, 2014
Finance Minister commends TPF advice on government to cut down expenditure
Deputy Finance Minister Mwigulu Nchemba has commended Tanzania Policy Forum (TPF) advice on government move to cut down its huge expenditure and introduce ways to raise revenue collection saying such a stand was healthy for national development. One of the areas with unnecessary expenditure recommended by TPF according him involved the luxurious use of vehicles which is said to cost the government heavily in terms of both purchases and maintenance costs. Speaking recently during a live televised “Kumekucha” program run by ITV, the Deputy Minister for Finance Hon. Mwigulu Nchemba reiterated the government governments’ commitment to reduce such expenses and direct them towards development issues. He said instead of commemorating different festivals like Environment Day, HIV/AIDS Day, Malaria Day, Water Week and more others while spending huge amounts of money, such funds should be directed towards solving such problems that are faced by the public. “Although these ceremonies have helped raise awareness of social problems and bring together relevant stakeholders to discuss the progress towards alleviating them, it is important to direct such funds to solving their problems like lack of water in their respective communities” he said. He said TPF has therefore recommended modest and prudent spending on such events in the 2014/15 financial budget. The government’s reiteration comes as the new fiscal year 2014/15 spending starts to kick off following parliamentary budget approval last month. During the discussion of the budget proposal, the government stated how it intends to work on the challenges experienced during the last fiscal year. Some of these challenges include; misuse of public funds including spending on unnecessary items, inadequate revenue collection and delays in disbursement all which affected timely implementation of planned development projects. “For a long time now government officials have been directed to purchase economic cars as a means of reducing expenditures but this has not been implemented. What we are going to do now is allocating to them funds for the purchase of these economic cars because it does not make sense for Directors to use a Land Cruiser VX operating from Dar es Salaam city” he said. Different analyses have been conducted on how the government can improve its budgeting in collecting resources and proper use of the available resources.
Tanzania's Deputy Finance Minister Mwigulu Nchemba
Tax exemptions play a greater role in denying the government significant amount of funds that it could collect and use to fund other sectors. According to a study conducted by Policy Forum, Tax Justice Network – Africa and Action Aid two years ago, it was noted that Tanzania had the potential to collect taxes amounting to 20.9% of its GDP, according to IMF estimates, but was only collecting a little over 14% as of (2009/10 estimates). Although tax revenues as a share of GDP are gradually increasing (15.8% in 2011/12, this is still short of the acknowledged potential. The “Tanzania: Per Tax Exemptions Study” produced in October 2013 by the Ministry of Finance, points out how much the government is losing through tax exemptions. The report says that it is more efficient for developing countries to focus on improving their investment climate rather than granting tax exemptions to corporations while insisting that before investing in Tanzania businesses will consider other (more important) factors than the level of tax exemptions they could get. According to Sikika, while estimated expenditures on various allowances are stagnating at Sh360 bn, the estimates for ‘Fuel, Oils, Lubricants’ increase moderately by 6% to Sh71 bn. Despite the Government’s clear intention to control the costs of seminars and workshops, overall travel expenses are estimated to grow by 11% and the budgets for ‘Hospitality Supplies and Services’ increased by 19% to a total of Sh4bn in the 2013/14 budget. “With the understanding that resources are always scarce, a more prudent spending of public resources has to be emphasized so as to attain maximum service delivery, Nicholas Lekule Policy Analysis Manager at Policy Forum. He added, “Spending needs to be more prioritized and that fund should be directed to those areas that benefit the majority of the citizens”.