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MP furious over tax holidays for investors

Discussion in 'Jukwaa la Siasa' started by Jobo, Jun 21, 2008.

  1. J

    Jobo JF-Expert Member

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    2008-06-21 09:34:53
    By Lusekelo Philemon, Dodoma


    The five-year tax holiday enjoyed by tourist hotels owned by foreign investors in Tanzania have drawn the wrath of Members of Parliament, some saying the exemptions were but a series of loopholes through which to evade taxes after the grace period is over.

    The MPs` remarks came during the scheduled fifth and last day of debate on the estimates of the 2008/09 government budget, tabled in the National Assembly here on Thursday last week by Finance and Economy minister Mustafa Mkulo.

    A number of legislators who contributed to the debate yesterday said some investors kept renaming their hotels and other related ventures or instituting management changes in highly suspect attempts bent on helping them maximise profits.

    ``Most investors doing business in this sector in our country have been getting huge profits, while paying very little to the government in taxes and other dues,`` charged Maulida Komu (Special Seats � Chadema).

    ``For years they have been evading taxes, mainly thanks to the gaping loopholes made easily available during the grace period. This has made the government lose billions upon billions of shillings in revenue from the sector,`` she added.

    Without giving any names, she said many of the hotels that have been changing names after the grace period are based in Dar es Salaam, Mwanza, Arusha and other major urban centres.

    ``This is an area the government was supposed to work on in order to get more revenue. This is one of the least tapped areas in the country in terms of tax collection,`` the opposition legislator pointed out.
    She said local investors in the hotel industry have been paying huge taxes although they got far lower profits than their foreign counterparts.

    ``Indigenous Tanzanians who have invested in guest houses are subjected to lots of taxes while their profits are very meagre. This is very unfair to our people. The government in general and the tax authorities in particular should work more seriously and urgently on this matter,`` she told the House.

    Komu also expressed her discomfort over the fact that the government was often fond of taxing soft drinks, beer and cigarettes more heavily whenever it was time for a new budget.

    ``This is very dangerous� It amounts to adding to the weight of the burden on the shoulders of the poor people already knee-deep in economic and other problems,`` she noted, warning: ``Should the people stop consuming beer, soda and cigarettes, the country`s economy will die a natural death.``

    The MP blamed controversial and other bogus contracts in the mining and energy sectors and the �ten per cent kickbacks� they are commonly said to attract for the economic mess millions of Tanzanians were languishing in.

    She appealed to Finance and Economy minister Mustafa Mkulo and his team of experts ``to step up tax collection efforts by casting their net wider to cover in all areas that have not been tapped rather than keep relying on items that contribute little to the country`s economy``.

    ``Minister Mkulo should rescue the poor Tanzanians suffering out there. Many of them don�t know where and how they will get their next meal,`` she added.

    Turning to inflation, the legislator said it was strange that crude prices in the Middle East had fallen by $5 per barrel but fuel prices in Tanzania were still rising.

    She said the local oil dealers were after indefensibly high profits and called on the government to tame them.

    Another Special Seats MP, CCM�s Anna Abdallah, urged members of the ruling party to work together in solving the problem facing the country.

    She cited the scandal allegations revolving around the Bank of Tanzania�s Central Bank�s External Payments Arrears (EPA) account, saying collective efforts were needed to recover the huge amounts of money involved from the culprits within the shortest possible time.

    ``We should not be divided on this. What we need is to ensure that the money is recovered. I am sure none of us here present acquiesces in corruption,``said the former cabinet minister.

    She also advised the government to put up its own fertiliser factory ``to meet the country`s demand and uplift our agriculture``, saying Tanzania was rich in natural gas, an important raw material in the production of fertiliser.

    Tarime legislator Chacha Wangwe (Chadema) called for increased government support for agriculture and a more focused war on grand corruption within the government system.

    Susan Lyimo (Special Seats - Chadema) concurred, adding that there was need to communication as this was not a luxury and imposing higher taxes on mobile phones as proposed under the 2008/09 budget estimates was unacceptable.

    By the time we went to press yesterday, minister Mkulo was still responding to wide-ranging MPs` reservations and recommendations on the budget estimates, which the House was later expected to endorse. [/B]
    SOURCE: Guardian

    But the Budget was passed irrespective of the noted anomalies! Kweli kelele za chura............. I love my country and wish everyone felt the same!
     
    Last edited: Jun 21, 2008
  2. J

    Jobo JF-Expert Member

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    The whole issue is a complicated issue. Application is made by the investor and in most cases these are companies that have secured a franchise from international hotel chains. They then buy or lease a place previously owned by another person who was on a tax holiday, and the cycle goes on and on.
     
  3. Lunyungu

    Lunyungu JF-Expert Member

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    If they were real /serious then they would have not supported the budget .
     
  4. J

    Jobo JF-Expert Member

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    That is exactly the point. I always say that Bunge sessions are sometimes a waste of our money although of course they are the ones to approve such money(what a rhetoric)! You find them making so much noise on the way they are not satisfied with some items in the budget but end up by saying "naunga mkono mia kwa mia". so why dont you just keep quiet and save your breath for a more important issue!?
     
  5. Mahesabu

    Mahesabu JF-Expert Member

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    Likizo Ya Kodi Iondolewe....!
    Inawanufaisha Zaidi Ma-bujwazii...!
     
  6. J

    Jobo JF-Expert Member

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    Hicho ndo kiswahili kingine cha mafisadi!!!!!! Umenikumbusha Frans Fannon!
     
  7. Kuhani

    Kuhani JF-Expert Member

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    Lakini walioiweka ni ma-bujwazii, kwa nini waiondoe kama inawanufaisha?
     
  8. J

    Jasusi JF-Expert Member

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    Lakini hawa wabunge wanao uwezo wa kufanya chochote kuhusu likizo hii ya kodi. Kukasirika tu haitoshi. Wanapaswa kuchukua hatua.
     
  9. J

    Jobo JF-Expert Member

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    Yes, hatua zenyewe zinaweza kuwa za aina mbili. Moja ni kufuta kabisa hizo incentive kama business inayohusika itafanyika kwenye already established business. Sioni sababu ya mtu aliyerithi iliyokuwa Sheraton na kuiita Royal Palm alipewa tax holiday kwa sababu gani. na baadaye ikaenda tena kwa the next one! la pili ni kunegotiate na hao ambao wanapata hiyo holiday kuhusu wao kuanza kulipa kodi mapema zaidi ya walivyokuwa wameahidiwa!
     
  10. Kuhani

    Kuhani JF-Expert Member

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    Ndio maana Zitto aliposema Bungeni anashangaa Mkulo hajaondoa misamaha ya kodi, nikasema, say whaaat? Nyinyi ndio Bunge, ndie upinzani, fanyeni vitu vyenu. Mnasubiri Mkulo. Haya!
     
  11. S

    Son of Alaska JF-Expert Member

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    jamani,lets be realistic,on some of these issues,nionavyo mimi,these tax holidays,are the only alternative,we have of keeping these hotels going.the reality is,investing in the tourism sector in tanzania is very risky,tax them,they wont even breakeven,next thing the are out,and hotels crumbling.I am sure wengi humu JF wanalijua hili,lakini argue just for the sake.i think the hotel industry is not as booming,as we are made to believe,otherwise what can explain hizi hotel zinazo collapse every other day
     
  12. A

    August JF-Expert Member

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    Je Tax Exemptions ni kwa ajili ya Taifa au baadhi ya viongozi

    --------------------------------------------------------------------------------

    Kwa muda nime kuwa nafikiria kuhusu suala la tax exemption na mambo yanavyo kwenda nchini, kama tulivyo elezwa hivi karibuni kuhusu makampuni makubwa kutolipa kodi , kama VODa ambapo rostam yupo Elinino Yumo wengine kama Msekwa alipata kuwa mwenyekiti wa Bodi,Watoto wa baadhi ya viongozi wapo, Cocacola, Hotel za Kitalii na kwenye Sekta ya madini.
    suala la kujiuliza na ukihusisha mahusiano ya hayo makampuni, tunaona ni kwamba ni hatua au njama za maksudi ya baadhi ya viongozi kujipatia mitaji kwa mgongo wa wa tanzania wote kwa ujumla wetu. na bahati mbaya kuna baadhi ya wabunge wanapitisha hii miswada bila kujua madhara yake na ni kwa faida ya nani.
    Naomba tujadili hili kwa faida ya nchi yetu, na kama hii mada inafaa kuwekwa katika fungu lolote naomba kwa muda iache hapa kwa faida yetu
     
  13. J

    Jobo JF-Expert Member

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    Son of Alaska, I doubt whether the hotels are running at a loss! I can bet that these people make alot of profits but like any other investment in this country, they have so many people in their pay books that they find it unnecessary for them to pay tax. Those people who would have insisted for tax payment are the very ones that expect huge returns from the hotels. Most of these hotels are full booked everyday and there are so many activities going on around them, so what is the loss? I presume the new investors of what used to be Holiday Inn, now Southern Sun will also get a five year tax holiday! Holiday Inn was already an established franchise. Southern Sun is also an established franchise. How long will it take for them to get profit? I am sure it is already full booked for the next few months. So the exemptions are not for our benefits but for the investors and those in their paybooks!
     
  14. J

    Jobo JF-Expert Member

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    I agree with you. Kuna watu wananufaika ni misamaha hii siyo wawekezaji peke yao.
     
  15. S

    Son of Alaska JF-Expert Member

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    sasa JOBO,unafikiri,tax exemption ikiondolewa,hizi hotel zitasurvive? it must be remembered,hii policy ililetwa,because zilikuwa zinakufa.the only reason inayowaleta hawa investors,ni hii policy.lazima tukubali nchi yetu kiuchumi iko katika a VICIOUS CIRCLE,which over the years,tumeshindwa ku break out.Hawa investors ni sisi ndio tunawabembeleza waje kuinvest and as such come on their terms
     
  16. A

    August JF-Expert Member

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    Naomba utafute mtu anaye jua tax akupe somo.
    Somo dogo nataka kukupa ukifanya biashara ukipata hasara huta katwa kodi, na utaruhusiwa kuibeba hiyo hasara katika mwaka unaofuatwa.
    Pili jengo la Hotel unapata capital allowance , hivyo utajikuta baada ya miaka kadha, jengo ni lako , ili hali sisi tumekuchangia kujenga hiyo Hotel.
    Sasa tax holiday ni nafuu ya kodi unayo pata kwa kuwekeza kwenye hoteli. i.e ukiwa umepata faida haitakatwa kodi.
    Kwa hiyo ni vizuri ukawekeza kwenye hotel ndigu yangu. hiyo capital alllowance tutakayo kupa itakusaidia.
     
  17. S

    Son of Alaska JF-Expert Member

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    AUGUST,many thanks kwa hilo somo,now if its easy as you seem to be putting it,how come not many local investors take the plunge,why then hawa foreign investors sit on our noses every other day,and we just dont seem to have any solutions apart from crying,eti kuna watu wanafaidika
     
  18. J

    Jobo JF-Expert Member

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    Son of Alaska, mimi sidhani kama hii tax relief ndiyo inasaidia hotel kusavive! Mbona kuna hotel za wazawa bado zinaendelea kupeta tu? Biashara ya Hotel if well managed lazima ikupe faida maana siku zote kuna wageni ambao wanahitaji huduma ya hotel! Sijui sana kuhusu capital redemption kwa sababu nilijua hii inatolewa kwa mmiliki wa jengo na siyo kwa service provider. Kama wewe ni ndiye umejenga jengo na pia unaendesha biashara ya hotel basi unastahili capital redemption! Tatizo langu liko kwa service provider kupewa tax holiday ya 5 years na kabla hiyo miaka haijesha, anamuuzia mwingine ambaye naye anaapply na kupewa relief nyingine and the cycle goes on.
     
  19. S

    Son of Alaska JF-Expert Member

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    JOBO,nimekupata loud and clear,hii tax holiday ya five years ndiyo inayotuumiza kichwa,because of this loophole,foreign investors mug us under diffrent names.The powers that be are powerless,cause hizi hotel lazima zi operate,cause at least the provide some employment and also provide a cosy picture that all is well.Sasa jobo ingekuwa wewe ndiyo decision maker,hiyo tax relief ungeiondoa and risk the aftermath,yaani the partial meltdown of the hotel sector in tanzania.usiniambie ungerekebisha vipengele kadhaa,maana hawa investors,either you are with them,or the abandon you
     
  20. J

    Jobo JF-Expert Member

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    SOA, Mimi ningekuwa decision maker relief ambayo ningeitoa ni capital redemption for a very limited time, say two years. Hii ningeitoa kwa fixed assets. Kwenye floating assets ningeweza kutoa nafuu kiasi lakini siyo total exemption. Kwa mfano ningekuwa makini sana na payment of VAT. Nisingekubali claims ambazo hazina miguu au mikono kwenye VAT. Hapo unakuwa na uhakika kuwa atleast for every customer the government nets an income. But again I am not an economist! Zaidi sana ningekuza wazalendo wa ndani ili waendeshe na kujenga mahoteli. Anachotaka mgeni sio jina la hotel, ni services la sivyo Impala Hotel na mwenzake Ngurdoto wasingepata biashara.
     
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