Controller and Auditor General, Prof Mussa Juma Assad,
Tanzania loses billions of shillings every year in unwarranted tax exemptions to foreign companies, Controller and Auditor General Prof Mussa Juma Assad told the National Assembly yesterday.
Tabling the CAG’s report for financial year 2013/14 in the House, he pointed out that while the government failed to fund various development projects in the last financial year, it gave tax breaks of a whopping 22.33bn/- to two giant miners – Geita Gold Mine and Resolute Tz Ltd.
“There is shocking revelation that the same government that begs for donor aid from foreign nations loses about Sh2.780 trillion ($1.684 billion) every year due to failure to collect what it deserves from these potential taxpayers,” the CAG report revealed.
He cited that the said amount is actually more than what the government borrowed from the Chinese Bank to finance the construction of the 524km gas-pipeline from Mtwara to Dar es Salaam.
“Put simply, the lost amount represents 18 per cent of this year’s budget,” he told the House.
Similarly, the CAG said the government lost nearly 400m/- in tax exemptions granted to Arusha based Kiliwarrior Expeditions Ltd in the same financial year.
“This is more than the government received from donors to buy radiotherapy machines at the Ocean Road Cancer Institute (ORCI),” the CAG said.
Prof Asaad also faulted the government’s failure to rule over tax appeal cases that he said now amount to 1.716trn/-. “The amount is more than the USD290million approved by the World Bank to fund the second central corridor transport project Dar es Salaam Bus Rapid Transit,” the professor pointed out.
“The Tanzania Revenue Authority should fast-track and improve pre-audit and investigations to address tax appeals between the government and taxpayers,” he said.
Speaking on the government’s tax base collection, the CAG expressed disappointment on what he described as ‘government’s snail paced investment efforts and its minimal push for the use of Electronic Fiscal Devices (EFDs).’
The CAG said government loses about 9bn/- annually as a result of private companies defying to use EFD receipts when paying taxes.
According to the CAG, even though the Tanzania Revenue Authority (TRA) issued a penalty amounting to 440.8m/-, the authority collected a mere 72m/-.
“There has been little or poor investment in institutions such as the ATCL, TAZARA and TRL leaving them to rely heavily on government subsidy,” Prof Asaad went on to say.
The CAG also warned over dilution of shares in commercial institutions like NBC Ltd that had negative impacts on government’s revenue collection, he said and urged for the establishment of an investment Fund under the Treasury to manage government shares.
Further, he pointed out that the audit found various shortfalls in government’s budget expenditure that include payments without receipts, over spending as well as in nugatory and uncontrolled spending.
Prof Asaad’s nine-page summary report also revealed that nearly 500bn/- about 25.45 per cent of the amount set aside for development projects in the national budget was not utilised.
He blamed this on delayed release of funds by development partners, long procedures for public procurements, limited capacity of local government authorities as well as the few experts engaged to oversee implementation of development projects especially in rural communities.
Prof Asaad also revealed that: “The budget allocation for various development projects was very minimal which in turn delayed payment of contractors and in turn up to 3.5bn/- had to be paid in interest.”
“Payment of ghost workers remains a serious challenge...during the last financial year, at least 1.01bn/- was paid by the government to ghost workers in local government authorities and over 141.4m/- was paid to ghost workers in the central government,” he further told the House.
He summed up citing that the alarming amount lost to ghost workers is manifestation of a complex network of corrupt officials in the treasury, regional administration and local governments as well as in the country’s various councils.
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