The government has withdrawn plans to abolish tax exemptions for religious organisations and some non-governmental organisations operating in the country following a public outcry.

The plans, contained in the 2009/2010 draft budget, drew harsh criticism from Christian and Muslim leaders in Tanzania, who argued that they could cripple schools, hospitals and other services provided by faith-based organisations throughout the country. Currently religious groups enjoy tax relief on imported equipment such as medical and laboratory equipment, ambulances and hospital beds, offsetting the cost of providing essential services particularly in poor rural areas.

The government is looking for ways to mitigate the shortfall in revenue due to tax exemptions, which accounted for 3.5 per cent of gross domestic product in 2007-2008 according to the finance minister Mustafa Mkulo.

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