Real Challenge is in Implementing Plans

The Citizen (Dar es Salaam)

8 June 2011

editorial

The government has unveiled a national Budget aimed at stimulating economic growth. The Sh13.5 trillion package demonstrates a commitment to dealing with the difficulties the country is facing as a result of domestic and external pressures. Comprehensive measures have been sought to mitigate the effects of these tough challenges by avoiding tax and other policy changes that could aggravate the situation.

As a result, through the current estimate of income and expenditure, Finance minister Mustafa Mkulo and his advisers have come up with proposals to give relief to the business community and the common man. The Budget has been skillfully compiled to deal with these two requirements, while at the same time trying to raise more revenue to meet the increasing expenditures.The impact of the decision not to increase taxes on petroleum products should go a long way in curbing the skyrocketing pump prices.

This will lessen the burden of the high transport and industrial production costs and, hopefully, help to bring down the cost of living. It is within this thinking that the Excise Duty on Heavy Furnace Oil has been reduced by 50 per cent to Sh40 a litre.

This will significantly help to cut industrial production costs and boost yields in this key sector. Another exciting measure in the energy sector is the scrapping of the petroleum levy for oil and gas exploration companies. The aim is certainly to attract more investors to a sector that requires more injection of private capital to realise its vast potential.Also retained are tax reductions and exemptions offered on the importation of trucks, tractors and buses to reduce transportation costs.

Tax concessions

There are also many other tax concessions to the business community and investors that should lead to tangible reductions in the cost of doing business, and make the country a more favourable investment destination in the region.The slashing of Customs duty on wheat imports from 25 to 10 per cent; the exemption of duty on imported raw materials used to manufacture soap and white oil also underline the need to resuscitate the economy. The reduction of Destination Inspection Fee on Free on Board (FOB) on imported commodities from 1.2 per cent to 0.6 per cent to speed up cargo clearance and reduce the prices of imported commodities is another bonus.

Developing the infrastructure

But it is not all just about reductions. The government has also signaled its devotion to improving logistics by increasing by 85 per cent the allocation for infrastructure development. It will make available Sh2.8 trillion, up from Sh1.5 trillion in the 2010/11 financial year.Proof that the government is aware of the public outcry over the endemic power shortages is evident in the allocation to the Energy and Minerals ministry being increased from Sh327 billion to Sh539 billion.

Implementation is crucial

However, though it is all very good to come up with such excellent proposals, everything will come nought unless the measures are properly implemented. The best budget in the world that cannot be put into effect will remain useless. Also of utmost importance is the improvement of public finance management to ensure the revenue is used prudently. The government must follow up on the numerous tax concessions to ensure they work, reduce bureaucracy and engage in regular consultations with the private sector, which has a key role to play in national development.

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