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Govt admits VAT rates too high
2008-07-24 10:50:42
By Guardian Reporter, Dodoma
The government acknowledged yesterday that value added tax (VAT) rates charged on consumer commodities were rather high and would look into the possibility of lowering them.
Responding to a question asked by Parmukh Hoogan (Kikwajuni, CCM), Deputy Minister for Finance and Economic Affairs Omar Mzee agreed that comparatively speaking, other countries in the East African Community (EAC) charged lower rates.
The legislator had advised the government to lower the levy, which currently stands at 20 per cent of consumer commodities sold to end users, so as to enable local traders compete on levelled field with their regional entrepreneurs.
``It is quite true that our VAT rates are higher compared to those of other countries in the region. In Kenya, they charge 16 per cent, Uganda 17 per cent, Rwanda 18 per cent, while they charge nothing in Burundi,`` he told the House.
The minister said the advice to lower the rates was acceptable, and the government would work to see if there was any possibility to make the suggested adjustments.
However, he said VAT rates in Tanzania were in no way impacting negatively on Tanzanian traders, because the particular tariff was essentially internal and had nothing to do with foreign trade.
Mzee said partner states of the EAC did observe the Customs Union (CU) and Common External Tariff (CET) protocols, but were completely left free to institute their own internal tax regimes.
The Kikwajuni MP had wanted to know why the EAC partner states endorsed the CU and CET protocols, yet they charged different rates when it came to VAT.
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