How duties may hurt manufacturers

Dar es Salaam. The Confederation of Tanzania Industries (CTI) has called on the government to extensively consult with industrial players as some budget proposals tabled last week are likely to affect the manufacturing sector adversely.

Although the budget accommodated between 75 and 80 per cent of the tax reforms the CTI proposed earlier, the umbrella body for manufacturers said some measures have negative aspects that will not help create a competitive business environment, which is important for sound industrial development.

They were concerned with the government’s plan to increase import duty on crude palm oil (CPO) from 0 to 25 per cent for one year and additional duties on semi-refined and double finished edible oils whose duty goes up to 35 per cent. Others are maintaining the additional import duty of 15 per cent on industrial sugar, implementation of Electronic Tax Stamps (ETS) and introduction of Sh200 per litre excise duty on wines produced from more than 75 per cent local content.

Speaking during a press conference yesterday, the CTI chairman, Dr Samuel Nyantahe said the measures on CPO and refined and double finished edible oils has direct consequences on investors of refined cooking oil and may end up causing shortage of the product. Dr Nyantahe added that maintaining the additional import duty of 15 per cent on industrial sugar has resulted into serious cash strain on manufacturers and has increased the cost operations.

“It is worth noting that this duty is not a revenue component to the government, but simply administrative burden to the Tanzania Revenue Authority that can be removed,” noted Dr Nyantahe. He also pointed out that measures taken on locally produced wines would lead to increased production costs, prices of the products and eventually affect competitiveness of the domestic industry.

This would consequently lead to reduction on consumption, according to CTI executive director Leodegar Tenga. He said the 2018/19 budget has attempted to balance between raising more government revenue and economic growth. “I am optimistic that with further consultations and collaboration between the government and private sector, the intended good initiatives will be met and compliance enhanced,” said Mr Tenga.

CTI cited the positive measures as but not limited to, exemption of Value Added Tax (VAT) on; packaging for pharmaceutical products, additives for manufacture of animal and poultry feeds and sanitary pads. Also reduction of corporate tax to 20 from 30 per cent, to new 120 investors in the pharmaceutical and leather industries for five years, removal of sisal levy paid by firms that process sisal into fibers, and maintaining the current excise duty rates on non-petroleum products produced from materials sourced locally.

Others are Introduction of five per cent excise duty on imported non-petroleum products, maintaining of import duty at 10 per cent on wheat for one year, granting a duty remission on paper for manufacture of gypsum board and apply a duty of zero instead of 10 per cent,.

Also in a pipeline, is granting duty remission self-adhesive labels and charging a duty of 10 and instead of 25 per cent, granting duty remission on printed aluminum barrier laminates and applying a rate of zero instead of 25 per cent.