Major Expectations

The Citizen (Dar es Salaam)

The Citizen Team

7 June 2011

opinion

As Finance and Economic Affairs minister Mustafa Mkulo reads the Budget Speech in Parliament today, Tanzanians expect him to address the high cost of living and the ongoing power crisis, among other issues. The Citizen spoke to people from across the country in these two past weeks, and their main expectation is a budget that will improve living standards as promised by the ruling party in its election manifesto.

Sumbawanga residents Maufi Mzindakaya and Rosemary Mwanauta said the government’s main focus should be on taming the spiralling cost of living.”I’m not an economist, but I expect a budget that will ease the burden on ordinary Tanzanians. Life has become unbearable, and it’s time the government came to our rescue…our suffering is beyond words,” said Ms Mwanauta, a small-scale trader.

However, Mr Mkulo’s options are limited. The government is under pressure to increase revenue collection to fund the Sh13.5 trillion Budget, and one option is tax increases.

Tax cuts on petroleum products

There have been calls for a substantial reduction of fuel prices through hefty tax cuts. Petrol and diesel pump prices have risen by almost 25 per cent in the last 12 months with a litre now retailing at an average of Sh2,000.

Mr Geoffrey Mwijage, a Mwanza resident, said the cost of living was bound to rise further if fuel prices would not be reduced.

“Petrol, diesel and kerosene prices must come down if we are to have a drop in the cost of living in the near future.

“I hope the government will this time around give us something that will have a positive impact on our lives. People expect to see increased spending on social services, whose quality has been deteriorating by the day,” Mr Mwijage said.Dar es Salaam taxi driver Mikidadi Mahamudi said he expects the government to do something that would make fuel much cheaper.

“Life has become too expensive for ordinary people. Many can no longer afford basic items. Fuel prices are too high, not to mention the cost of spare parts…when the cost of transportation goes up, prices of other things invariably increase too…it will be a major disappointment if the government does not take this into account in the Budget,” he said.

The Opposition said last week that it was possible to cut taxes on petroleum products by up to 40 per cent, adding that this would be highlighted in the Alternative Budget to be tabled in Parliament this week.The deputy Shadow Minister for Finance and Economic Affairs, Ms Christina Mughwai, said it was imperative that fuel prices be reduced to rein in the cost of living.

The rising cost of fuel has been blamed on high prices in the world market caused by unrest in the Arab world and the depreciation of the shilling.

What are Mr Mkulo’s options?

The government has already indicated that it would not raise taxes on petroleum products. Some experts say a further reduction is unrealistic.

“Reducing the excise duty on petroleum products would mean that the government would then have to look at other sources to fill the gap left by this reduction. Given the fact that our tax base is already narrow, this would be a real challenge,” said Mr Rishit Shah, a tax director with PricewaterhouseCoopers in Dar es Salaam.

He said the percentage of taxes in pump prices had actually fallen from 40 per cent in 2007, the last time the government increased taxes on petroleum products, to just 23 per cent now.

Social services and other key sectors

People expect Mr Mkulo to table a budget that will increase spending in key sectors, including education, health, agriculture and energy.

Inadequate development in these sectors eat into the incomes of people who take their children to private school in the hope of giving them better education. Many people also opt for more expensive healthcare at private hospitals due to poor service rendered at government health facilities.

Low agricultural production has partly contributed to high food prices, while the ongoing power crisis has adversely affected the economy and disrupted manufacturing.

Dar es Salaam resident Ms Chiku Soi said she was hoping for improvement of social services. “We spend a lot of money for social services, which are inadequate. Something should be done to make sure that services are at least satisfactory to reduce the burden no low income earners,” she said.

Ms Cosmoc Nguli, a Lindi resident, said the government should increase budgetary allocations to the education, health and agriculture sectors in line with the Millennium Development Goals. “My expectation is that the new budget will focus on the common man. I have confidence in Parliament. It has members who understand the needs of their people, and I hope they will make sure the Budget takes care of people’s needs,” Ms Nguli said.

Mr Andrew Muneja Sayi of Arusha said: “I expect the Budget to improve infrastructure and social services, including health, education and water. It is also time to ensure reliable power supply for the betterment of the economy. Many entrepreneurs have gone out of business due to lack of electricity.”

Mr Ramadhani Songoro of Mwanza said: “I hope the government will allocate more money to priority sectors such as education and education. The standard of health services is deteriorating fast, and something should be done immediately.”

“Will the 2011/12 budget improve social services? Let’s wait and see, but I know that there are MPs who will bring to the government’s attention our suffering,” said Mr Ali Masudi, a Lindi entrepreneur.

Development crisis

University of Dar es Salaam lecturer Bashiru Ally said the country was in development crisis due to inadequate infrastructure and social services. “The country has no clear development agenda. We do everything on an emergency basis for short-term gain and relief,” he said.

Mr Ally said growing inequality, over-expenditure and donor dependence bode ill for the economy regardless of the proposals contained in the Budget.

Mr Deo Momburi, a Dar es Salaam shoe shiner, said he expects “more of the same” in the 2011/12 Budget.

“I don’t expect anything new. These budgets are all the same. In fact, life is getting tougher as the years go by…we are getting used to this,” he said.

Mbeya Cement general manager Mbuvi Ngunze said he expects the Finance ministers of the East African Community member states to increase the common external tariff for cement imports to make local cement more competitive.

“We are optimistic that the budgets for the East African countries will consider the common external tariff for cement this year…in case they will not do anything, we will continue communicating with the governments,” he said.

Reported by Mussa Mwangoka in Sumbawanga; Frederick Katulanda in Mwanza; Mwanja Ibadi in Lindi; Joyce Joliga in Songea; Filbert Rweyemamu in Arusha; and Alawi Masare, Beatus Kagashe and Bernard Lugongo in Dar es Salaam; more budget stories on pages 13 to 28

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