TAX NEWS - 2010

Tanzania Tax: Farmer query tax waivers

Horticultural growers and exporters say tax exemptions announced last week by the minister for Finance and Economic Affairs, Mr Mustafa Mkullo, are not enough.

They said duty on horticultural export consumables which was increased many folds by the government last year, has neither been scrapped nor lowered.

"It is very unfortunate that this has not been considered in the Budget," said Ms Jacquiline Mkindi, the executive director of the Tanzania Horticultural Association (Taha).

She said Taha members and other players in the horticultural sub-sector are sbtill optimistic that the government through the Ministry of Finance and Economic Affairs, would also consider waiving the duty.

She said this in a statement released by Taha, a powerful lobby group for the horticultural sub-sector based in Arusha, when commenting on the 2010/11 Budget estimates tabled before Parliament by minister Mkullo on Thursday last week.

Ms Mkindi said despite some tax reliefs and scrapping of Value Added Tax (VAT) on a number of items as announced by the minister, horticultural producers may not entirely benefit from the exemptions.

"We are seeing some challenges on the Budget as far as the industry is concerned due to the fact that some horticultural producers are not going to benefit from the exempted tax on packaging materials," she pointed out.

In his Budget speech, the minister exempted VAT on airfreight charges for transportation of flowers. The measure, according to him, is aimed at boasting horticultural production and export.

The government also granted VAT special relief on horticultural green houses in a measure also aimed at promoting horticulture productivity in a way to maximise its unexploited potential to the economy.

Those to benefit from the granted VAT special relief to the supply of goods and services are commercial and organised farms including those under the registered cooperative unions.

They would benefit through building of their infrastructure in the fields of irrigation canals, construction of road networks, godowns or similar storage facilities.

But Taha maintains that the new taxation regimes on packaging materials in the agricultural sector would not benefit all horticultural producers, but only the targeted fruit and milk processors.

The Taha boss said one of the reasons why Tanzania fresh fruits and vegetables fetched lower prices in the global markets even lose identity was because of poor grading and packaging.

"This exemption of packaging materials would, therefore, be exempted to fresh fruit and vegetables both for domestic and export markets," she insisted.

According to her, last year, the government increased duty on horticultural export consumables which fall under the plastic category.

This came as a measure to control plastic importation into the country. The duty on consumables was, therefore, increased from 20 per cent to 120 per cent, an increase of 500 per cent.

"It is very unfortunate that this has not been considered in the new Budget but we are still very optimistic that the government through the ministry of Finance will also consider waiving this duty," she said.