The government has won praise from Members of Parliament after reversing and revising several proposed taxes, levies and duties in the 2026/27 Budget, in a move lawmakers described as a clear demonstration of responsiveness to public concerns.
The changes, agreed upon following consultations between the Ministry of Finance and the Parliamentary Budget Committee, were incorporated into the Finance Bill before Parliament approved the national budget in Dodoma on Wednesday.
Among the measures withdrawn were a proposed five percent excise duty on motorcycles, a TZS10 levy on locally produced sugar and a one percent withholding tax on agricultural, livestock and fisheries products proposals that had attracted criticism from legislators and stakeholders who argued they would increase the cost of doing business and burden ordinary citizens.
Presenting the Finance Bill, Finance Minister Ambassador Khamis Mussa Omar said the government had carefully considered recommendations from the Budget Committee and other stakeholders before making the changes.
He said the bill aims to amend various tax and non-tax laws to strengthen revenue collection, improve the business environment and support economic growth in strategic sectors.
“The reforms are intended to improve tax administration, enhance revenue collection and create a more conducive environment for investment and production in sectors such as industry, agriculture, energy and health,” Mr Omar told Parliament.
One of the most significant changes concerns imported vehicles. The government reduced the proposed excise duty on vehicles aged between eight and 10 years from 20 percent to 18 percent.
The proposed duty on vehicles older than 10 years but not exceeding 20 years was lowered from 40 percent to 35 percent, while the rate for vehicles above 20 years was cut from 50 percent to 40 percent.
Lawmakers also welcomed the withdrawal of a proposed five percent excise duty on sports betting stakes, saying the measure could have negatively affected the gaming industry and discouraged participation.
The Finance Bill further introduced stricter conditions for tax exemptions granted to mining companies under framework agreements with the government.
Under the revised provisions, exemptions will not cover petroleum products and will only apply during the construction phase of mining projects. The incentives will automatically expire once commercial production begins.
Mr Omar said companies found abusing the exemptions would face legal action, including the cancellation of incentives and recovery of unpaid taxes.
The government’s decision to abandon plans to impose a five percent excise duty on motorcycles was particularly welcomed by MPs, many of whom argued that the boda boda sector remains a vital source of employment and transport services across the country.
Similarly, Parliament endorsed the removal of a proposed one percent withholding tax on payments for agricultural produce, live animals, milk, fish and hides, following concerns that the measure would increase costs for farmers, livestock keepers and fishers.
A separate proposal to impose a one percent presumptive tax on income generated from agricultural products was also dropped.
In another relief measure, the government reduced the presumptive tax rate for small taxpayers from the proposed 4.5 percent to four percent for businesses with annual turnover ranging from TZS11 million to TZS200 million.
The Finance Bill also broadened the use of five percent of revenue generated through the Railway Development Levy, allowing part of the funds to be directed towards infrastructure that supports value addition and industrial development.
Meanwhile, the government scrapped the proposed TZS10 levy on locally produced sugar and instead shifted the charge to imported sugar, a move aimed at protecting domestic manufacturers while maintaining revenue collection targets.
The revisions were widely interpreted in Parliament as a sign of the government's willingness to listen to public concerns and refine fiscal policies in ways that support economic growth while protecting key sectors of the economy.
With the budget now approved, the revised measures are expected to ease pressure on farmers, transport operators, small businesses and consumers, while helping the government pursue its broader development and revenue objectives.
