Govt has long to travel to revenue, budget standards

In a situation where it is being said that plenty of unnecessary expenditure hitherto tied to the civil service wages and emoluments bill as a whole has been removed, there was something a bit surprising about that wage bill.

In what manner does it increase in tandem with rising revenue collections, so that the government practically has nothing to spare despite success?

That seemed to be the question that various observers seemed to be posing, as in the late 1990s the sum of Sh1.1trn was the total budgetary figure for the whole year (specifically in1998) where local finances stood at Sh720bn and foreign aid standing at around Sh400bn or slightly more than a third of the Budget.

For most employees the salaries they used to be getting during that time, if they have put up nearly the same job aren’t likely to be too different from current salaries, even if on the whole many may be receiving twice the old figure. But how do salaries budgets multiply virtually by ten?

Evidently this situation has to do with coping strategies in the civil service, and it is also apparent that even with no-nonsense top state authorities, plenty of it is still there, waiting to be uncovered.

One such coping strategy is the old bogey of ghost workers, where people are paid hefty salaries while in graves or in retirement, which is scarcely ever translated to finding out to whose accounts those salaries were being channeled.

Instead, successive government battled to weed out ghost workers, not monster officials earning the salaries of ghost workers. And there might be more hidden aspects of budgeting.

This lacuna notwithstanding, the reports were also refreshing in a different direction, namely that top government officials are seeking for means of restricting the wage bill to something close to a third of all revenue collection.

A citation of what experts say affirmed that the average standard proportion of the wage bill even within sub-Saharan African states ia about 34 per cent of total revenue collection, about a third, which admittedly has hardly ever been the case in Tanzania since the early 1990s, and well before.

It may have been so in the years up to the oil price hikes of October 1973; the currency never recovered.

In that context what was especially interesting wasn’t the fact that about half of revenue collections went to salaries, in particular if this observation also had to do with paying accumulated debts of various civil service groups like teachers.

Other categories being paid out are construction companies, money that falls under development expenditure, where indeed it is on record that when the fifth phase team came into office late November or say started work mid December one of the first steps they took was to channel Sh12bn for development expenditure.

Now that looks like a drop in the ocean by new claims.

Even the fact of having recovered around Sh80bn that had been shielded away by various traders instead of being paid out as taxes now looks like it is being dwarfed by proper figures of how much in taxes needs to be collected in a month.

It is also evident that Chief Secretary Ombeni Sefue may have been right to say the reason the salary bill looks too high is that revenue collection isn’t yet enough, if that explanation fits in with a realistic revenue collection projection. If the February salary bill stood at Sh573.7bn and this was above half total revenues, it may still be valid if collections total Sh1.5trn.

That is where the shoe perhaps starts pricking, if this level of revenue collection is realistic, as it means rising by close to a third of total collections within the space of a few months.

Whether this can be achieved or not is a different matter but there is a likelihood that it might, as this government has been beating records of sorts.

Even this effort at comparing the level of tax collection with total revenue and finding it inadequate is well beyond the ordinary, as ordinarily Tanzania doesn’t use those comparisons. The idea of allocating a third of revenue for salaries looks like middle income economy, not among LDCs.

After a rebasing exercises back in 2014 it was being said that Tanzania only has about $30 in per capita GDP to reach middle income status, and indeed if this $30 per capita GDP is translated into revenue collection equivalent, the net figure is likely to cross the Sh1.5trn in total that the Chief Secretary was alluding to, and if one looks at the figure closely, the right amount could be Sh1.8trn for the total February salary amount is close to Sh0.6trn.

That means despite the best of expectations and tentative ability to use new fangled international standards, chances are that Tanzania still has a ladder to climb before it can realize a third of revenue for salaries.