There will be no increase on excise duty on petrol and diesel this year, the government has finally agreed. The Minister of Finance and Economic Affairs, Dr William Mgimwa told the National Assembly that the excise duty on petrol and diesel would remain at 339/- and 215/- per litre respectively, allaying fears of immediate rise in fuel prices and its domino effects on the lives of the people and in the economy.
Minister for Finance and Economic Affairs, Dr William Mgimwa
Presenting the Finance Bill of 2013 in Parliament, the minister said the excise duty on kerosene would rise from 400.30 to 415/- per litre. The government had earlier planned to increase excise duty on petrol from 339/- to 400/- per litre, that would have led an increase in petrol price by a minimum of 174/- per litre.
Dr Mgimwa said the measures on excise duty on petroleum products agreed late on Thursday would address the problem of fuel infiltration and contain possibilities of rising inflation due to increased fuel prices. He said the measures also were aimed at bringing relief to Tanzanians who would have suffered from increased prices of commodities, due to rising fuel prices if the excise duty on petrol and diesel would have been increased.
He said, however, that fuel levy on petrol and diesel increased from 200/- to 263/- per litre. The increase on fuel levy is expected to generate about 155.8bn/- for the road fund.
Dr Mgimwa said the introduced petroleum levy of 50/- per litre on petrol, diesel and kerosene would remain unchanged and is expected to generate 299.0993bn/- to boost the road fund. The finance minister also said mobile money transfer services by the mobile phone companies would not be affected by the extended duties on mobile phone services.
He said even with the changes on the wording from telecommunication services to electronic communication services in the final text of the bill, mobile money transfer services would not be touched. In the 2013/14 financial year, the government has extended excise duty to all services provided by the mobile phone companies (instead of air time only).
It has also increased the excise duty rate from 12 per cent to 14.5 per cent. Dr Mgimwa said the government would work on the recommendations of the budget committee who alerted on the possibilities of double taxation to mobile phone users when their calls are linked from one company to another.
He said they would work with the Tanzania Communications Regulatory Authority (TCRA) on the matter with a view to avert possibilities of double taxation to mobile phone users. The finance minister said the five per cent in excise duty on non-utility vehicles aged more than 10 years would remain.
The excise duty on this category has been increased from 20 per cent to 25 per cent to discourage importation of aged vehicles, reduce accidents resulting from aged motor vehicles and protect the environment.
The budget committee had recommended that the government reconsider the decision to increase the duty on aging motor vehicles, as it would make them more expensive and hence unaffordable to themajority of the people.
The committee advised the government to consider reducing duties on imports of brand new vehicles to make them less expensive and affordable to many people.
The government had also postponed to July 2014 abolition of exemptions of 10 per cent withholding tax on rental charges of aircraft lease by non-residents.
Dr Mgimwa said the government would work on the recommendations of the budget committee to explore other sources of revenue generation, such as deep sea fishing in the Indian Ocean and on the export oil mill cakes.
The committee had recommended to the government to explore the two as alternative source of revenue from the expected loss due to lowering of excise duty on petrol.
According to the committee, the government loses about 352bn/- annually from illegal fishing conducted in the deep of the Indian Ocean and about 16bn/- annually from the export of oil cake mills.
The committee had proposed the government could at least charge three per cent of royalty in fishing in the Indian Ocean whereby about 35.2bn/- would be obtained.
It also proposed that the government should also charge 100 US dollar per one tone of sunflower seed and another 100 US dollar to oil cake mill as export levy to obtain about 16bn/- annually.
The finance minister also said they would work on other recommendations to relook at investments in the mining sector, with a view to increase government revenue from the sector.
Members of Parliament finally endorsed the Finance Bill 2013 unanimously, to give the government legal instruments to implement changes in a score of taxes for the 2013/24 financial year.
By HENRY LYIMO, Tanzania Daily News