“The government is the biggest source of business, this talk of giving priority to public institutions that offer services like conference facilities and even the media, I don’t know what will happen to private facilities,” Prof Honest Ngowi told a KPMG budget post-mortem meeting held in Dar es Salaam last Friday.
He said as the biggest source of business, the government should refrain from discriminating against the private sector which is the real engine of growth as it employs millions and provides the bulk of taxes to Treasury.
“If the government conducts its meetings at public conferences or hotels, what will your hotels and conference halls do?” he told a group of business elites, chief executives and politicians who included Kigoma North lawmaker, Zitto Kabwe.
Prof Ngowi also dismissed talk of government going back to engage in profit making business saying such a role should strictly be left to the private sector as previous experience has shown that state enterprises were messed up.
He poked holes in Finance Minister, Dr Philip Mpango’s maiden budget saying it had put a lot of emphasis on introducing new taxes that will likely hurt the majority poor naming excise duty impose on tourism services as bad.
KPMG Senior Tax Manager, Nsanyiwa Donald warned against introduction of value added tax on tourism services arguing that Tanzania will lose out to Kenya which has a far better tourism industry which is VAT free.
“There are already many taxes in this industry,” Donald noted saying it’s high time that Treasury should give more incentives to a sector that is bringing home more foreign currency than any other industry.
He said the lowering to pay as you earn from 11 to 9 percent will benefit a small group of employees because many others with bigger salaries will be subjected to other types of taxation. Donald commended Dr Mpango for abolishing nuisance taxes and fees imposed on agriculture produce but noted that more needs to be done.
The KPMG Senior Manager also predicted disputes between tax collectors and brokers at Dar es Salaam Stock Exchange in deciding valuation of shares which will be subjected to taxation starting July 1, this year. Dividend will also be charged income tax.
Alliance for Transparency and Change (ACT Wazalendo) Leader who is also Kigoma North lawmaker, Zitto Kabwe wondered why has Dr Mpango’s budget introduced an income tax to charged on lawmakers gratuity during the final year of serving in parliament instead of taxing sitting allowances.
“MPs earn 220,000/- daily as sitting allowance which is not taxes, it’s wrong because this is taxable income,” Kabwe said after KPMG Head of Tax Department, David Gachewa to respond to Prof Ngowi’s presentation which cited the introduction of income tax on their gratuity.
“I can see honourable Zitto Kabwe in the room, maybe he can respond to this issue of this new tax,” Gachewa who was moderating the meeting said. Kabwe backed Dr Mpango’s new tax on lawmakers’ gratuity which will only come during their final year in office.
“Tax the sitting allowances, I am wondering why is the government taxing this income,” he argued saying Treasury will earn nearly 40m/- per annum from each member of parliament if it taxes the daily sitting allowances.
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