Tax waiver on horticulture business given a welcome in Tanzania

Arusha. The Tanzania Horticultural Association (Taha) has welcomed a tax waiver on imported cold storage systems, saying it would boost the key sub-sector of the economy.

"We commend the government for this. At last it has listened to our long time concerns", said Anthony Chamanga, the association's development manager.

He said the Value-Added Tax (VAT) waiver, announced by the Finance minister Phillip Mpango in his budget speech on Thursday, would reduce production costs and boost  exports.

The scrapping of the tax would enable them to store large quantities of perishable horticultural products before export to the markets overseas.

The 18 per cent VAT on the cold storage facilities, he observed, was another burden to the exporters and local processors of fresh products.

"The cold storage systems are very expensive. The price of one unit ranges between $ 100,000 to $ 150,000", he told The Citizen when reached on the budget proposals.

During his budget speech for the 2019/2020 financial year in Parliament, Dr. Mpango announced a raft of tax cuts aimed to boost horticultural production.

The minister said exemption of VAT on imported refrigeration boxes was intended to reduce the production costs and promote modern horticultural farming.

Horticulture is the fastest growing sub-sector in the in the economy and accounts for 38 per cent of foreign exchange generated through agricultural exports.

It generated about $ 700m and $ 642m through exports in  2017 and 2016 respectively with estimates for last year estimated to be upwards of $ 800m.

The sub sector registered a growth of 11 per cent in the last seven years. 

Projections are that the exports will hit $ 1.3billion in three year's time if the current production trend is sustained.

Taha says the scrapping of a 10 per cent import levy on the packaging materials for horticultural products was another relief.                                       

Another boost for the horticulture industry is the raising of import duty for fruits and vegetables to 35 per cent from 25 per cent. 

"This would not only boost horticultural production but assure local producers of ample market within", Mr. Chamanga said in an interview.

Taha, a powerful lobby group for the industry based in Arusha, has also successfully lobbied against the restriction on export of raw agricultural materials.

For horticulture, the measure would facilitate exports fresh fruits, vegetables, cut flowers and other products and hence ensure their competitiveness in the international markets.

The ban was effected through the amended VAT Act of 2014 and was to be effected from July this year.

Taha announced recently that it would challenge the ban it insisted would negatively impact on the industry if enforced "since our exports have to be delivered to consumers in raw form".