Tanzania drops plans to impose VAT on churches and mosques: CEN 7.03.09 p 6. July 5, 2009
Posted by geoconger in Anglican Church of Tanzania, Church of England Newspaper, Politics.trackback
Archbishop Valentino Mokiwa of Dar es Salaam
The government of Tanzania has rescinded plans to impose a VAT on purchases made by religious institutions following marathon talks with the country’s religious leaders. The government’s u-turn in the spat over VAT came days before a vote in Parliament on the government’s 2009-2010 budget forestalling a political showdown in the East African nation.
After talks with the Primate of Tanzania, Archbishop Valentino Mokiwa of Dar es Salaam and other Christian and Muslim leaders, Prime Minister Mizengo Pinda on June 17 announced the government would lift the proposed VAT charges on church-run education, health care and development services.
“The President has blessed the decision to expunge the proposal,” the prime minister told a press conference in Dar es Salaam. Existing VAT exemptions would remain in place provided church leaders saw that their institutions complied with the spirit of the tax laws, he said.
Last month the government announced it would lift VAT exemptions on religious institutions on all purchases save for those directly related to worship, such as church or mosque construction and upkeep.
Finance Minister Mustafa Mkulo said some religious institutions had abused their tax exempt status and had cost the government over £200 million last year. Church tax exemptions equaled 3.5 percent of GDP in 2008, Mr. Mkulo said, while they comprised only 1 percent of GDP in Kenya and 0.4 percent of GDP in Uganda. This was evidence, he said, that some church institutions were abusing their VAT duty free status.
“Tax exemption reduces government efforts in providing social services and infrastructure development, which are important in providing better social services to all citizens,” he said.
The Christian Council of Tanganyika is warning that the move to impose taxes on religious institutions will lose it votes in the general election slated for October 2010.
Archbishop Mokiwa, the deputy chairperson of the Christian Council of Tanzania, (CCT) said it was wrong to tax churches while the government gave VAT exemptions to foreign mining firms to encourage overseas investment. He warned that unless the government rescinded the VAT scheme, it would likely see the displeasure of the 10 million members of the CCT reflected in the polls at the Sept 2010 general elections.
Talks between the government and Archbishop Mokiwa, along with other Christian and Muslim leaders, led to an agreement that religious leaders would use their best efforts to see that the system was not abused.
The church VAT scheme had also proven to be a political liability for the prime minister’s government, as opposition MPs had seized on the issue in seeking to defeat the government’s budget for the coming fiscal year.
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