July 20, 2024

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Tanzania: Finance Bill 2024 – Debate Extends for Second Day

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MEMBERS of Parliament did not decide on the Finance Bill, 2024 as planned yesterday to allow more time for the government to include some additions they were still working on.

Speaker of the National Assembly Dr Tulia Ackson told legislators that there were still some amendments to be added to the bill before it comes for the third reading today for a crucial decision to allow the government move on with its revenue and expenditure plans for the 2024/2025 starting next Monday after it is assented to by the President.

“We understand there were challenges with traders and the discussions have been continuing with them. Now, due to this challenge the government has asked for more time and we have given it to them,” she said.

Submitted in august House for second day yesterday, the bill showed the government abandoned plans to extend fuel levy to the Compressed Natural Gas (CNG) following recommendations by MPs that it will be counterproductive towards efforts to promote natural gas as alternative fuel for motor vehicles, instead of the traditional petrol or diesel fuel.

The plans earlier proposed in the 2024/2025 government budget were not contained in the bill. The government had also proposed fuel levy extension to Compressed Natural Gas (CNG) used in motor vehicles of 382/- per kilogramme.

However, the Parliamentary Budget Committee and legislators faulted the plans and proposed the government to provide incentives to promote use of natural gas for vehicles.

The Parliament Budget Committee commended the government for abandoning the idea and advised to scrap tax on equipment used in conversion of motor vehicles to run on gas, so as to reduce conversion cost which ranges between 2.0m/- and 3.0m/-.

Bringing sanity to sugar sector

The bill contains amendments to the Sugar Industry Act, to among other things, give the National Food Reserve Agency (NFRA) exclusive mandate to import, store and distribute sugar for domestic consumption to cover sugar gap.

The amendments bring to an end a period seven domestic sugar producers enjoyed exclusive rights to import the commodity.

Presenting the budget estimates mid-this month, the Finance Minister Dr Mwigulu Nchemba said empowering NFRA to import, store and supply sugar to cover the gap is intended to ensure constant availability of the commodity in the market and address hoarding by manufacturers without compromising protection of local industries.

The minister also said the government will amend the NFRA regulations by including sugar as part of food security.

Tanzania experienced acute sugar shortage this year, which sent its prices to record high. The shortage was blamed on heavy rains at the end of last year but there were allegations of hoarding and price-fixing by industrial cartels.

MPs had accused the producers of creating an artificial shortage of sugar to hike its prices and welcome plans to involve NFRA in the sugar business.

Domestic sugar producers in Tanzania have been given exclusive rights to importation during the sugar shortage as protective measures against foreign competition.

Minister for Agriculture, Hussein Bashe said under the proposed amendments, NFRA will deal with covering sugar gap only.

Also Read: Budget sails through

He said involving NFRA in sugar business was a normal government responsibility to intervene during market failures to protect the consumers, farmers and investors. He said empowering NFRA to import, store and supply sugar to cover gap will also be useful in stabilising prices.

“This instrument will be used in (sugar) price stabilisation. There is no bad intention. It is government’s responsibility to intervene during market failures,” he said.

Other changes contained in the amendment provide that the sugar board shall not issue sugar import licence unless it is satisfied that the local sugar production is below the level of sugar requirement at a particular time.

A sugar manufacturer shall, at the beginning of every production season, declare and publish in a newspaper of wide circulation names of their sugar distributors for each region.

Shot in arm for Contingency Fund

The government has broadened sources of funds to enable Contingency Fund to finance urgent repairs of road infrastructure damaged by climate change effects.

The sources of fund of the Contingency Fund shall consist of funds appropriated from the Consolidated Fund in any financial year; windfall fuel toll charged pursuant to the Road and Fuel Act; 50 per cent of the railway development levy charged pursuant to the Railways Act.

The government accepted an advice from the Parliament Budget Committee to remove a subsection that gives the minister powers to prescribe other sources on fears that may be misused.

Cashewnut Board

The bill contains amendments to the Cashewnut Industry Act, so that export levy of the crop can be remitted to the Cashewnut Board for five years. This measure aims to stimulate the cashewnut subsector, providing funds for subsidies, research and enhancing the sector’s contribution to economic growth.

Banking and Financial Institutions Interest-Free Lending

Amendments were also made to the Banking and Financial Institutions Act, Bank of Tanzania Act, and Microfinance Act to enable banks, financial institutions and microfinance companies to offer interest-free loans. This move aims to facilitate access to financial services for institutions that operate on a noninterest basis, ensuring they benefit from similar opportunities as conventional financial entities.

Railway and Road Development

The Railway Development Levy on imported goods has been increased from 1.5 to 2 per cent, with the revenue split equally between the Railway Development Fund and the Road Fund. This change aims to secure funds for the development and maintenance of railway and road infrastructure.

Health Insurance Funding

The Universal Health Insurance Act now specifies that 2 per cent of excise duty from carbonated drinks, alcoholic beverages and cosmetics, along with 100 per cent of excise duty on gaming stakes, will be allocated to the Universal Health Fund.

By  Daily News.

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