By Nuru Paul
Every year around May, the ministries in Tanzania present their budgetary estimates for the upcoming financial year for discussion/approval in parliament. Once these estimates are approved, the Ministry of Finance MoF) then includes the same in the government budgetary estimates which are similarly tabled to the Parliament in second week of June as part of the government budget. Thereafter, the Ministry of Finance (MoF) prepares the Finance Bill and presents it to the public through discussions in Parliament, prior to it being assented to and enacted into law as the Finance Act at the beginning of July.
For the year ending 30 June 2025, the Finance Act 2024 was officially published on 30 June 2024 and came into force on 1 July 2024. This was exactly two weeks after the Finance Bill was released on 18 June 2024, which was issued shortly after the national budget was presented on 13 June 2024. The budget speech outlined several key proposals for changes to existing tax laws, revenue-raising measures, and other fiscal policies that support the implementation of the national budget. . As seen from the timeline, the process moved very quickly. This article focuses on whether a two-week period is truly enough time for stakeholders such as businesses, professionals, and the public to carefully review the Finance Bill and provide informed feedback before it is passed into law through the Finance Act.
Well, the budget process in Tanzania is enshrined in the Budget Act 2015 which guides not only the process during the budget cycle but also includes the expectations of what the process aims to deliver. Whilst the budget process is under the remit of the Minister of Finance, in its entirety, the budget process involves a number of stakeholders, including the public. Taking this into consideration, the budget cycle is expected to be completed on or before 30 June of each year after debate in the National Assembly, it does mean that there is hardly enough time between the issuance of the Finance Bill and the Finance Act to discuss the proposed changes.
Looking at East African peers, taking Kenya as an example, we see a different approach. Kenya released its Finance Bill around May 2024, giving taxpayers and stakeholders plenty of time to review and share their opinions. This extended period is crucial because it allows everyone affected to fully understand the changes, potential impacts and suggest improvements.
Further afield in SADC, South Africa’s process also demonstrates the advantages of allowing more time for legislative scrutiny. The Finance Bill’s release in October and subsequent enactment in December provide a structured timeline for parliamentary debate and public consultation. This process ensures that the proposed changes undergo rigorous examination, leading to well-balanced and effective tax laws, revenue-raising measures, and other fiscal policies. Moreover, the engagement of various parliamentary committees and the public within a longer period will promotes transparency and accountability in the legislative process.
In contrast, a shorter timeframe limits the ability of stakeholders to conduct a comprehensive review and provide meaningful feedback. Having more time to review the finance bill is important for several reasons including:
- Detailed Review: With more time, stakeholders can thoroughly examine the proposed changes and avoid the risk of passing laws that might be impractical or hard to follow. Businesses, tax experts, and the general public can spot potential problems and suggest workable solutions.
- Stability and Clarity: More time for feedback helps avoid frequent changes to laws, which can cause confusion and make compliance harder. Well-thought-out laws, created with comprehensive feedback, tend to be more stable and easier to follow, leading to better compliance and higher revenue for the government.
- Valuable Feedback: Adequate time for feedback allows the government to understand the real-world effects of the proposed changes from those who are directly impacted. This helps in making informed decisions and enacting fair, practical laws that benefit both the economy and society.
Intriguingly, the Budget Act expects the Minister of Finance to prepare and lay before the National Assembly (The Parliament) the Plan and Budget Guidelines by February each year on the basis that, the National Assembly is in for sessions. These Guidelines effectively mirror the Government’s budget position to be read out in June of that particular year and therefore is essentially a ‘mini budget’. In such a case, considering the approaches from Kenya and South Africa, this ‘mini budget’ could be considered open to all stakeholders for scrutiny and assessment. This therefore would give room for amendments to be considered and included prior to formalising the actual budget, mitigating the limited time issue. Furthermore, it should be noted that active participation by stakeholders is not for want of trying, for example the Tanzania Private Sector Foundation (TPSF) has been actively involved in discussion on proposed reforms to taxes and other charges.
In conclusion, allowing more time between the release of the finance bill and the enactment of the Finance Act, as seen in other countries would greatly benefit our legislative process. In fact, a longer time will go in hand with our Tanzanian culture of first not hurrying good things but taking them slow for a better outcome. Least to say, a longer time would ensure thorough review and constructive feedback, prevent the presence of impractical laws, reduce the need for frequent amendments, and foster a better relationship between the government and public.