TANZANIA: Govt conducts feasibility study on 35 pct cement tax

Ministry of Industry and Trade experts are now conducting feasibility study to oversee whether the reintroduction of 35 per cent tax on imported cement will have less brunt to both manufacturers and buyers. 

In a phone interview with The Guardian at the weekend, Permanent Secretary in the ministry, Uledi Mussa said the study has come after cement manufacturers urged the government to reverse the tax so as to create fair competition.

He said in order to ensure fair competition; the findings obtained will be presented to the government for further implementation.

According to him, the government will work on the proposal to oversee if the proposals will bring about fair competition and have delicate balance to both manufacturers and buyers. 

He, however, admitted that currently the price of cement in the country is still high due to production cost especially the cost for electricity, adding that it is not a reliable source of energy.

“The government is finding ways to ensure that electricity is available at affordable prices. It’s our hope that the installation of gas pipe to Kinyerezi power plant by December this year will help to reduce production cost of cement,” he said. 

Besides, he said the operation of new cement factory “Dangote” will to great extent increase cement in the market hence reduce its prices.

He said the reason why the saying ‘sensitive products” was removed in 2008 was because of cement shortages occasioned by the construction of stadiums for the 2010 World Cup in South Africa.

Mussa further said as a result, import duty was reduced to 25 per cent from 40 per cent and has remained so todate.

Local producers claimed that the cement import tariff reduction has made cheap cement from China, India and Pakistan flood the market, with market insiders saying cement from those countries sold at 50 per cent to 60 per cent below the domestic market price.

Seconding the argument, the Standing Permanent Committee Chairman of Industry and Trade, Luaga Mpina said if the 35 percent levy is re-introduced, it will help check imported cement and boost local production and at the same time level the playing field for foreign and domestic companies.

Mpina said the government should reverse the tax in order to protect the local industry regardless of other East African countries’ decisions.

Recently, the East African ministers jointly decided to remove cement from the list of “sensitive products”, meaning partner states would continue paying an import duty of 25per cent on Portland cement and promised low consumer prices.

The East African Community (EAC) had a sensitive list of products covered by the EAC Customs Union Protocol, which exposed cement to a 55per cent tariff to be reduced by five percent a year from 2005.

While the 25per cent tariff may seem best to the bloc currently, the ministers are expected to address the tariff issue once its overall effect on the market is observed.

“We had hoped the import duty would be increased to at least 35per cent so that we’re cushioned from the imports,” said Narendra Raval, chairman of Devki Group.

Raval, whose company produces the National Cement brand, noted that local cement producers expected to be promoted before cheap imports were allowed into the market.