Play by the rules of the game,” this is what the government tells the business community in the wake of reports of worsening relationship between the two which has lowered business confidence.
Members of Parliament (MP) raised concerns over unpredictable tax regime which is increasing the cost of doing business and the recent government’s crack down on tax evasion and fraud targeting large companies saying it is increasing the level of mistrust between the government and the business community.
Debating budget estimates for the Ministry of Finance and Planning in Parliament last week, the MPs said the situation has created dysfunctional relationship between the government and the businesses where both sides will lose as businesses would weaken and lack strength to drive growth.
Others accused some government and Tanzania Revenue Authority (TRA) officers of being bullies, saying they use intimidations and threats in collecting taxes which is scaring businesses people.
“Traders are not enemies. The language of some of our leaders do not bode well instead they build hatred and enmity,” said Khatibu Said Haji (Konde, CUF) adding government leaders were afraid of telling President John Magufuli and wishing to please him to protect their positions.
He said what TRA was collecting were outstanding tax payments and as a result it would be gradually declining and added it was high time TRA officers sat down with the businesses community and discuss what was not going well.
“Let’s sit down with the traders to see where we’re stuck and plan a way out… Other countries build cozy relations with tax payers. We build hostility,” he said.
The shadow minister for Finance, Godbless Lema (Arusha Urban, Chadema) said the government was to blame for deteriorating business environment in the country due to bullying behaviour of some of its officers towards business people and unpredictable tax regime.
“The language of some of leaders is threatening and as a result business people are scared. Government officers use threats and investors are transferring investments to other countries because they have lost trust to the government,” he said without elaborating.
Mr Lema said TRA officers were using Tanzania Intelligence Security Services (TISS) and Prevention and Combatting of Corruption Bureau (PCCB) officers to threaten the business people and added that was counterproductive in efforts to boost tax revenue collection.
“Regional and district commissioners are threatening traders on orders from above…business people are scared, they have no confidence. “TRA officers are acting like police.
They are escorted by TISS and PCCB officers. I’m telling you cannot transform economy through threats,” he said. The Chalinze lawmaker (CCM), Ridhiwani Kikwete wanted the government to take note of increasing economic hardships facing the people but did not give more details.
“Life is becoming tough on the ground Mr Minister,” he said echoing sentiments of hardships among the people as small businesses are not doing well due to liquidity challenges following a decline in money supply and rising non-performing loans that have hampered private sector credit growth.
Mr Kikwete had advised on the need to look at municipal bonds and infrastructure bonds as other sources of revenue to the government. Hussein Bashe (Nzega, CCM) said unpredictable tax regime was making it more difficult for businesses to operate, defeating the purpose of increasing taxes to boost government revenue.
He cited Tanzania Breweries Limited (TBL) one of the largest tax payer in Tanzania saying the government collected less taxes in the current financial year after it increased taxes and proposed the government to plan together strategies to boost tax revenue collection where every part will have roles and responsibilities to meet.
The Nzega legislator said busi nesses were closing and others were forced to cut their workforces due to difficulties which could have been avoided.
However, the Finance Minister, Dr Phillip Mpango sought to reassure the private sector of the government commitment to improving the business climate and nurture business confidence but cautioned the rules of the game must be followed by both sides.
Winding up debates on his ministry’s budget estimates, he said business confidence is vital for the well-being of the nation and it is therefore the desire of the government to nurture it en sure Tanzania continues to attract domestic and foreign investments.
He said the government was keen to promote the private sector as the engine of economic growth and development. “It is vital that the rules of the game are made clear. It is important the tax regime is stable...but on the other hand the business community must also play by the rules,” he said.
Dr Mpango said the government and the private sector were like conjoined twins who depend on each other and as a result it is important they discuss together matters affecting their wellbeing for their mutual benefit.
According to him the doors were always open for representatives of the business community to discuss issues of their concerns through various platforms.
“Let me say, our president has genuine desire to ensure the business confidence is nurtured, but he must speak out and take action where he sees there is a problem,” he said adding the business people who play by the rules of the game need not worry as the crackdown was targeted to tax evaders and fraudsters.
The World Bank said in a recent report that uncertainty over government policies and a slowdown in the private sector cut Tanzania’s gross domestic product growth to an estimated 6.9 percent in 2016 from 7.2 percent the previous year.
“Policy adjustments, if they occur frequently, could cause uncertainty for the private sector, and this uncertainty could dampen private sector investment decisions,” it said in its latest economic update for Tanzania.
“The government should pay more attention to, and be more explicit about, the potential unintended consequences of government policies on the private sector.”