Budget discussions in a recent meeting of Tanzania contain numerous proposals that are intended to help stimulate the Tanzania economy and counteract recent changes in the country’s cost of living.
According to the proposed 2011/2012 Tanzania fiscal budget, the primary beneficiaries will include investors in the country’s agricultural and industrial sectors where tax relief will be used in an effort to relieve some of the burden on Tanzanian citizens.
Mustafa Mkulo, the Tanzania Finance and Economic Affairs minister, recently presented a Budget Speech in which he highlighted some of the upcoming proposals, including a 50 percent decrease in excise duty on heavy furnace oil (HFO), a reduction in taxes from 120 percent to 50 percent for manufacturers of plastic bags of more than 30 microns.
In addition, the Tanzania government has also granted a duty remission on raw materials for the production of toilet and medical soaps, a decision that is in line with the East African Community Customs Management Act 2004 and was made in response to complaints that the high duty on palm stearin had resulted in the closure of nearly 20 soap factories in the past five years.
“This measure is expected to reduce production costs and promote small and medium standalone soap industries in the country,” said the minister for Finance and Economic Affairs.
In an effort to help stimulate fish exports and increase the country’s overall foreign exchange earnings, the Tanzania government also announced a decision to eliminate the current tax withholdings on fish exports.
In addition, in order to help attract investors to the Tanzania agriculture sector, Mr. Mkulo announced a VAT exemption on spare parts for the threshers, rice dryers and mills, planters, trailers and power tillers that are used in organized farming.
“It is my hope that this measure will promote agricultural mechanization and attract investment in the agriculture sector,” he said.
Furthermore, Mr. Mkulo went on to reveal an additional VAT exemption on the pellet poultry feed and raw materials that used in the manufacture of fishing nets.
According to Mr. Mkulo, the Tanzania government is also currently working on a plan to reduce a number of fuel levies in order to provide relief from the price of petrol and diesel at the pump, which have risen by nearly 25 percent in the last year.