The East African Community (EAC) comprising Burundi, Kenya, Rwanda, South Sudan, Tanzania and Uganda, is contemplating increasing tax on clothing and footwear imports. A report commissioned on the two sectors by the EAC has recommended raising taxes by up to 50 per cent to reduce imports and help revive the region’s ailing textile and leather sectors.
“… over the years, the clothing and shoe manufacturing industries have collapsed due to the emergence of informal sector trade in used clothes and shoes and the impact of trade liberalisation,” the report says in its policy brief.
The report, authored by the EAC secretariat, proposes a 40 per cent tax on “readymade garments or $5 per kg whichever is cheaper”.
For the footwear sector, it proposes increasing the common external tariff (CET) on new shoes from 25 per cent to 50 per cent or $20 per pair (for leather shoes) and $5 per pair (for plastic shoes), whichever is higher, Kenyan media said quoting the EAC report.
Among the measures suggested include a three-year tax waiver for textile raw materials and shoe manufacturing equipment that are not available locally. A ban on export of raw hides and skins is also proposed.
If the proposals are accepted, it will increase the price of imported clothing and footwear in the six countries EAC region. (RKS)