PRESS RELEASE.
Tuesday, 18th June 2024 in Dar es Salaam.
The Minister for Finance, Hon. Dr. Mwigulu Nchemba (MP), presented the national budget for the fiscal year 2024/2025 on Thursday, 13th June 2024.
The Confederation of Tanzania Industries (CTI) is delighted to present its response and analysis of key highlights from the Budget Speech for fiscal year 2024/2025.
CTI is highly encouraged by the budget speech which shows the Government’s dedication towards driving economic growth and enhancing the business environment in Tanzania. This commitment is clearly reflected in the budget, with tangible investments and new initiatives aimed at fostering industrial growth, infrastructure development, and job creation.
Tanzania's budget for the fiscal year 2024/25 has been set at Tshs. 49.35 trillion shillings reflecting an 11.1% increase compared to the previous fiscal year’s budget of Tshs. 44.38 trillion shillings. From the budget, the Government expects to collect Tshs. 34.6 trillion shillings from domestic revenue. This year’s budget intends to mobilize more domestic revenues compared to the 2023/24 budget as shown in the graph below.
A key highlight of this year’s budget is the Government taking various reforms in the tax structure, fees, levies, and amendment of laws and regulations to improve the business environment. The reforms that have been proposed relating to the industrial sector are in the VAT, excise duty, fees and charges of agencies as well as import duty.
The list of tax proposals presented by CTI and approved/recommended is shown in Appendix 1 of this statement.
Some of the positive measures include the introduction of an industrial development levy on imported goods intended to protect local manufacturing, spur investments, and increase exports; reduction of fees and charges imposed by regulatory bodies to reduce production costs; reduction of import duty on industrial raw materials and production input to enhance the competitiveness of domestic industries; and Zero rating VAT on Textile products made using locally grown cotton to stimulate investment in the local textile industry.
The above-proposed tax measures are intended to assist domestic industries lowering production costs, encourage the use of local materials, boost competitiveness, and drive economic growth.
As we applaud the measures that the Government has come forth with, we wish to highlight areas in the 2024/25 budget that risk having a negative impact on industrial development. For example, the increase of the Railway Development Levy (RDL) from 1.5% to 2.0% of the CIF value, the introduction of excise duty at a rate of Tshs. 7,000 per litre on imported Un-denatured Ethyl Alcohol and Tshs. 5,000 on locally produced Un-denatured Ethyl Alcohol of an alcoholic strength by volume of 80% or higher (Ethanol) with HS Code 2207.10.00. This is effectively double taxation as such it should be offset by excise payment made every month. Also, to continue and to continue granting a stay of application of 50% and apply 35% on imported Kanga and Kitenge as well as valuation from USD cent 40 to 80 per meter, will have a huge negative impact on these industries.
The list of tax measures that could have a negative impact in industrial development is attached as Appendix 2. We request the Government to reconsider these measures.
Furthermore, CTI appreciates that the budget recognizes the crucial role of enhancing Tanzania's infrastructure network and improving transport links to create a favorable business environment. It specifically allocates substantial resources to expanding transportation infrastructure, boosting the electricity supply, and establishing special economic zones.
The Government budget for the year 2024/25 highlighted the key priority areas that align with the Third National Five-Year Development Plan 2021/22 - 2025/26, themed “Realizing Competitiveness and Industrialization for Human Development”. These priorities include;
- Completing flagship and strategic projects;
- Strengthening production sectors;
- Enhancing human capital development particularly in social services;
- Increasing the use of ICT;
- and improving the business environment and investment.
CTI believes that the selected priorities for the fiscal year 2024/25 will have a positive impact towards the sustainable development of the industries in the country.
Furthermore, CTI submitted tax proposals to the government for the 2024/2025 fiscal year, which have not been included in the budget speech. CTI respectfully requests that the government reconsider those proposals for the growth of the industrial sector and the country's economy.
- Mining Act (Cap 123) with the Regulation 2022 GN No. 574 of date 23 September 2022 which require a free carried interest of 16% in the shareholding of the cement, fertilizers, salt and lime manufacturing companies. CTI proposal is to exempt these industries from the provision of this Act and regulations.
- The steel sector proposed to increase import duty on finished iron and steel products from 25% to 35% or USD 250/MT to 350/MT whichever is higher and also to introduce a minimum import price of USD 1500/MT. However, the Government has retained the import duty at 25% and just increased the specific rate from USD 250 to 300/MT. This measure would not protect the domestic iron and steel producers who have invested heavily in the country making them less competitive.
Last but not least, CTI believes if the 2024/25 budget is executed properly the Government will enhance its domestic revenue collection, sustain economic growth, and improve infrastructure and public services and ultimately realizing overall economic growth.
CTI will work hand in hand with the 6th Phase-Government to achieve the set social and economic goals.
CTI Secretariat
P O Box 71783
Dar es Salaam
Tel: 2114954/ 213802/ 2130327
E-mail: https://cti@cti.co.tz/
Press Statement of the National Budget for the Fiscal Year 2024/2025