Dar es Salaam advised to raise mining tax Continues on

[BAK]

By FARAJA MGWABATI, 10th May 2011 @ 13:00, Total Comments: 0, Hits: 123
DAILY NEWS

THE International Monetary Fund (IMF) has urged the Tanzanian government to increase tax on mining activities as a strategy to boost revenue collection to meet its budgetary obligations.

“Strengthening value-added tax (VAT) compliance and enhancing the taxation of the mining sector will be a big boost to revenue mobilisation,” said the IMF Executive Board assessment of the economy through Article IV Consultation instrument with the government on Tuesday.

The mining sector contributes about 52 per cent of country’s export but it only accounts for three per cent of the country’s Gross Domestic Product (GDP).

The board reiterated its stance on broadening of the tax base, reducing exemptions and improving public financial management.

According to the study named ‘Informal Sector Taxation’ conducted recently by an assistant research fellow with Economic and Social Research Foundation (ESRF), Mr Apronius Mbilinyi, the government is losing heavily for failure to tax the informal sector.

The study shows that revenues lost as income tax amounts to between 35 and 55 per cent of the total tax revenue.

Sectors such as transport, real estate and consultancy are among those getting away without paying income tax.

While medium-term economic prospects remain favourable, Directors have encouraged the authorities to press ahead with essential fiscal consolidation and structural reforms to sustain pro-poor growth and employment over the medium term.

“While recognising that high fuel prices, weather-related supply shocks and shortfalls in donor aid could complicate near-term fiscal management, we encourage the authorities to continue to streamline current spending by trimming the wage bill,” they said.

IMF also has called on authorities to align spending more closely with available resources and tightening existing commitment controls to help prevent the re-emergence of arrears like what happened in the previous budget.

The Bretton Woods institution has encouraged the authorities to expeditiously complete their debt management strategy and maintain a cautious approach to non-concessional borrowing to ensure debt sustainability over the medium term.

“In this context, we stress the need to carefully select projects financed with no concessional borrowing through rigorous costbenefit analysis,” the board added.

Meanwhile, Finance and Economic Affairs Minister Mustafa Mkulo has said that the country was still within acceptable levels of borrowing and that the same had been proved by a study by the IMF.

He told reporters in Dodoma on Monday that the Bretton Woods institutions were aware that the government borrowed within acceptable terms and for development projects.

The minister’s position came following an IMF caution early this month that the government of Tanzania could be borrowing for recurrent expenditures, warning that debt levels will rise rapidly.

Mr Mkulo said, “What IMF was saying is that the government should not borrow on commercial terms to finance recurrent expenditure.

As the finance minister, I agree with that.” Tanzania’s national budget for financial year 2011/2012 is 11.9trl/-, out of which 7.3trl/- is meant for recurrent votes, while 4.5tr/- is allocated for development programmes and projects.

 

[BAK]

Mining tax exemptions being reviewed - govt

By Judica Tarimo

12th May 2011

Deputy Energy and Minerals Minister, Adam Malima

Government officials and mining firms' experts are reviewing the sector's tax exemption package with a view to creating a mutually beneficial situation.

This was revealed by Deputy Energy and Minerals Minister, Adam Malima in an exclusive interview here yesterday on the sidelines of the orientation seminar for ministers, their deputies and permanent secretaries which started here on Monday.

He insisted: "These technical issues require patience and extensive discussions…it is not possible for the government to wake up and say we are going to remove all tax exemptions on mining activities."

"We (government and mining companies) need to go through all the components in the tax exemption package, before we decide which should be removed, and which should be retained."
He said negotiations were still going on, stressing: "We want to overhaul the entire tax exemption package and not fuel imports only."

The minister noted this was a long and complex process, which involved a number of technicalities and thus required thorough analysis by both parties (government and mining companies).
"Review of the tax exemption package is still going on between the government and mining companies aimed at removing some components and achieving a win-win situation in the sector," he said, adding: "This has a significant contribution to the country's economy."

According to the minister, the government wants to make sure that tax exemptions are not misused by mining companies and that millions of Tanzanians, the owners of the natural resources, benefited from the God-given gift (precious minerals).

He admitted that for the past several years, there was massive misuse of tax exemption incentives on the part of mining companies, prompting widespread debates and public outcry over loss of government revenues through tax exemptions in the mining sector.

"And that's the motive behind the current negotiations between the government and mining companies. We want to prevent misuse of tax exemption incentives on one hand, and strike a balance on the other-- that's ensuring that both mining companies and government benefit from minerals, and Tanzanians also benefit from these resources," he said, without specifying exact date for conclusion of the negotiations.

Last year, a senior government official in the Energy and Minerals ministry was quoted as saying that a team of government experts officials and representatives of mining companies have started discussions aimed at removing tax exemption on fuel imported to support mining operations in the fields.

For years, opposition parties, activists and Members of Parliament have been exerting pressure on the government to remove tax exemptions in the mining sector, which they said denied the government substantial revenues.

According to Chadema Secretary General, Dr Wilbroad Slaa, the government is loosing about 700bn/- every month through the exemptions.

In 2008 the government formed a special team to review the mining sector with a view to increasing its contribution to national economic development.

The International Monetary Fund (IMF) Executive Board has urged Tanzania to increase tax on mining activities in a drive to boost the country's revenue collection and hence its budgetary obligations.

According to the Board assessment strengthening value-added tax (VAT) compliance and enhancing the taxation of the mining sector will be a big boost to revenue mobilisation in the country.
IMF also proposed to the government to broaden the tax base, reduce exemptions and improve public financial management.



SOURCE: THE GUARDIAN

 

[Froida]

Serikali iatsema Chadema ndio imechochea IMF waseme hivyo

 

[Kamundu]

Hatuwezi kuendelea kwa kukuza Tax hili ni wazo baya sana kwa uchumi. Tanzania inachotakiwa kufanya ni kuwekeza 10%-20% kwenye kila mradi wa madini hii itasaidia vitu vifuatavyo.

1. Kampuni hazitaweza kudanganya kwenye mapato kwasababu Tanzania itakuwa ni sehemu ya mwekezaji.
2. Bei ikiongezeka ya madini na pesa kwa nchi inaongezeka kama ilivyo kwenye Gold.

Hii itakuwa na manufaa makubwa kuliko Tax, tax ikiwa juu si nzuri kwa uwekezaji kabisa.

 

[nyumba kubwa]

Huko serikalini kuna wachumi wangapi wanaolipwa mishahara? Inakuwaje ushauri kama huu ni mpaka tususbiri IMF?

Mdau unaesema sijuhi tax ibaki kama ilivyo I totaly disagree with you. Hamna nchi duniani imeendelea kwa kutegemea rasilimali kama madini na mafuta kwa kucharge 3% tax. Labda uje na data ndio utu convince kwamba hatunyonywi. Hata waghana wameshtukia hili kwani nao hatuchekani. Tatizo hiki kimbembe cha "kuvutia" wawekezaji at any cost ndio kitakachotubakizia mashimo na pollution watanzania wakati nchi za western wanachuma madola toka kwetu. Kumbuka madini ni finite yana mwisho wa upatikanaji. We real have to benefit from those investments otherwise let them pack and leave!

 

[Kamundu]

Si muda wa kueleza kwa kirefu sana lakini nitajaribu kuelimisha.

Mfano: Tukiongeza Tax kutoka 3% to 5% litakuwa ongezeko ka 67% kwa Tax na kama tunapata $100m itakuwa $167M. Pesa hii inatokana na faida (Income Before Tax) ya $3.3B. Hivyo kampuni ya madini ikiwa na faida ya $3.3B na tukaongeza Tax kwa 67% Tanzania inapata $167M tu.

Kwa mfano hu kama Tanzania itawekeza 20% bali share ya Tanzania kwenye faida kabla ya kodi (Income Before Tax) itakuwa $667M (20%*3.3B) na kama wakilipa share ya kodi ya 3% watabaki na $647 na kama ni 5% watabaki na $633

Hivyo Tanzania iki invest 20% kwenye mradi na kuacha kodi ya 3% watapata $747 ($647+$100).

Utaratibu wa Tanzania wa ulipaji kodi kwenye madini wa sasa: Kwa sasa hizi kampuni zinaidanganya Tanzania kwamba pesa walizopata kwa uwekezaji zimetokama na Hedge ikiwa na maana wawekezaji kwenye hizi project wamekubaliana bei ambayo haitabadilika hata kama bei ya market itabadilika. Kwa misingi hii Tanzania inalipwa kodi kutokana na Hedge price ya Gold ya $500 kwa ounce wakati bei ya sasa ni $1400 kwa ounce. Hivyo kupunguza huu uongo na ujanja janja Tanzania ichukuwe share na kama wakileta mizegwe Tanzania inachukua Gold zake za 20% na inauza yenyewe kwenye market si ngumu. Hivyo ni lazima muelewe numbers badala ya kubisha bila kuelewa Tanzania inapataje pesa. Nchi nyingine kama Mexico na Brazil wanafanya hivyo na ndiyo maana wanapata pesa nyingi si kwa sababu ya Tax bali ni kwasababu ya Share. Naona hii itaelewesha watu kidogo sisi tuko huku nje tunafanya kwenye hizi kampuni kubwa na tunawaambia ukweli business inavyoenda

 

[fredmlay]

Tatizo kubwa ni time factor, itachukua miaka kadhaa kwanza kufanya hiyo tax review na kuondoa hizo exemption lakini itakapoonekana hakuna faida kwenye hili itatuchukua tena miaka kadhaa kuamua kuwekeza (kuwa na share) kama bwana KAMUNDU unavyopendekeza wakati ukweli ni kwamba hawa jamaa wanachimba kama vile wataondoka kesho angalia waziri anavyosema.. "These technical issues require patience and extensive discussions…it is not possible for the government to wake up and say we are going to remove all tax exemptions on mining activities."

Kwahiyo nchi yetu si kwamba ina sera mbovu tu bali pia kuchukua maamuzi ni swala la muda mrefu, mimi nalinganisha na wale viumbe wa zaman (dinosaur) ambao tunaaambiwa kwamba walikuwa wanapata taarifa ya kilichotokea mwilini mwao muda mrefu baada ya jambo kutokea mathalan kuumia labda mkiani itamchukua siku kadhaa kushtuka kwamba kuna tatizo na hapo ndipo tunapoumia zadi sisi kama nchi.

Tulipaswa kama nchi wakati tunafanya tax review na kuondoa hizo exemption kwanza tufanye kwa speed na kwa uhakika na kisha kuwe na tathmini kama kuna tija au la wakati tunajipanga kuwa na share.

 

[Joss]

Tatizo la serikali ya CCM ni kubwa kuliko maelezo. Wananchi wakipiga kelele kuhusu jambo fulani,yenyewe inaziba masikio,ila jambo hilohilo likiguswa tu na watu wa nje ,serikali inalifanya haraka, leo nimeona habari ippmedia kuwa Serikali inajipanga kupitia upya kodi za madini. Hii inaonesha serikali yetu haisikilizi wananchi wake,bali inasikiliza wafadhili wao, aibu kubwa.

 

[Saint Ivuga]

Serikali iatsema Chadema ndio imechochea IMF waseme hivyo

kwani hayo makampuni yanamilikiwa na akubwa nini?ndio maana wakasamehe kodi kwenye migodi

 

[kagamba kadogo]

wako kwenye payroll za makampuni ya madini

 

[eliakeem]

Si muda wa kueleza kwa kirefu sana lakini nitajaribu kuelimisha.

Mfano: Tukiongeza Tax kutoka 3% to 5% litakuwa ongezeko ka 67% kwa Tax na kama tunapata $100m itakuwa $167M. Pesa hii inatokana na faida (Income Before Tax) ya $3.3B. Hivyo kampuni ya madini ikiwa na faida ya $3.3B na tukaongeza Tax kwa 67% Tanzania inapata $167M tu.

Kwa mfano hu kama Tanzania itawekeza 20% bali share ya Tanzania kwenye faida kabla ya kodi (Income Before Tax) itakuwa $667M (20%*3.3B) na kama wakilipa share ya kodi ya 3% watabaki na $647 na kama ni 5% watabaki na $633

Hivyo Tanzania iki invest 20% kwenye mradi na kuacha kodi ya 3% watapata $747 ($647+$100).

Utaratibu wa Tanzania wa ulipaji kodi kwenye madini wa sasa: Kwa sasa hizi kampuni zinaidanganya Tanzania kwamba pesa walizopata kwa uwekezaji zimetokama na Hedge ikiwa na maana wawekezaji kwenye hizi project wamekubaliana bei ambayo haitabadilika hata kama bei ya market itabadilika. Kwa misingi hii Tanzania inalipwa kodi kutokana na Hedge price ya Gold ya $500 kwa ounce wakati bei ya sasa ni $1400 kwa ounce. Hivyo kupunguza huu uongo na ujanja janja Tanzania ichukuwe share na kama wakileta mizegwe Tanzania inachukua Gold zake za 20% na inauza yenyewe kwenye market si ngumu. Hivyo ni lazima muelewe numbers badala ya kubisha bila kuelewa Tanzania inapataje pesa. Nchi nyingine kama Mexico na Brazil wanafanya hivyo na ndiyo maana wanapata pesa nyingi si kwa sababu ya Tax bali ni kwasababu ya Share. Naona hii itaelewesha watu kidogo sisi tuko huku nje tunafanya kwenye hizi kampuni kubwa na tunawaambia ukweli business inavyoenda

Mkulu hili ni sahihi na linawezekana.......kuachia makampuni ya nje yawe na umiliki wa 100% wa hisa ni kosa... na hili si kwa madini tu... bali hata kwa makampuni ya simu n.k ..... maana hilo linapelekea faida yote kwenda nje.....hiki ni kitu kibaya sana. Halafu ile sheria ambayo inayataka makampuni yote ya nje yaorodheshwe kwenye soko la hisa la Dar es Salaam ni mkombozi wetu...ikisimamiwa vizuri itatufaa sana. maana sasa makampuni ya nje utakuta yanajiorodhesha kwenye soko la hisa la London au New York...lakini hapa unakuta hayajafanya hivyo....Usije ukashangaa kuona hata SongGas badala ya kujiorodhesa kwetu hapa ili sisi wamatumbi tufaidike utakuta limejiorodhesha huko London...

Kuhusu mtaji wa kununua hisa, serikali isisingizie....maana kuna mashirika ya hifadhi ya jamii yana pesa kibao lakini hazina kazi...utakuta mabosi wao wanalipana tu ma-double payment ya gratuity.....
Hii mifuko ya hifadhi ya jamii ishuriwe kuwekeza kwenye sekta ya madini....

 

[Kamundu]

Hii miradi yote ya mafuta na Gas hatuwezi kushindana na kodi lakini pesa zote za NSSF na hayo mashirika mengine zinaenda wapi? mbona wanawekeza kwenye Banks zenye risk zaidi kuliko Gold au Gas