The Tanzania Tanneries Association (TTA) has made a renewed call for the government to increase export taxes on raw skin and hides in the 2011/12 financial year. The Association wants the tax to increase immediately from 40% to 90% and eventually lead to a ban on exports to protect local industries and curb smuggling which affects the national economy.
Other countries in the region like Uganda, Sudan, Zambia, Ethiopia and Nigeria have banned the export of such raw materials, rendering Tanzania the most reliable market for them.
In an interview with The Citizen newspaper, TTA chairman Onorato Garavaglia, blamed lack of political will to rescue the sector despite frequent promises to intervene.“We have had several meetings with government officials where they consistently promise but nothing happens in terms of action… this comes at a time when local tanneries are running short of raw materials,” he lamented.
The chairman said he was dismayed that despite a joint meeting with various stakeholders last week, where they agreed to find a new way forward, the authorities have reiterated that the current export arrangements would remain in place. A section of the media reported that the government would continue to grant export licenses for raw hides and skins as the local tannery sector did not have enough capacity to process the raw materials produced in the country.
According to the chairman Onorato, planned investments for the whole tannery sector in the country would produce 2.4 million pieces of hides and 13 million pieces of skin with an annual revenue collection of around US$98 million (150 billion Tanzanian shillings).
He stated the country’s installed capacity in the tannery industry is 1.5 million pieces of raw hide and skins compared to the 50,000 pieces it produces currently. He added that the country has the capacity to produce 8.5 million pieces of skin per year but only four million pieces of skin were available due to exports
Mr Onorato noted that the sector currently employed only 2,000 people, adding that upon availability of more raw materials it could create employment for up to 15,000 people. The East African Community (EAC) partner states of Tanzania, Kenya and Uganda are broadly divided on the exportation of raw hides and skins.
The government of Uganda has imposed a new export duty for raw hides and skins even though initially the three countries had a common policy and equal export tax at 40 per cent, an equivalent of US[[ArticleContent]].40 per kg regardless of the price.
The new tax in Uganda is 80 per cent on the value of the raw hides and skin. While Tanzania has not changed the ongoing duty system; Kenya’s policy is not very clear at present. This, according to the leading independent global report on the industry called The Sauer Report
, would see the emergence of illegal businesses among regional member states. The report on leather, skin and skin products, offers a bleak future for the Tanzania leather industry if no action is taken to check the exploitation of the sector and irresponsible exports..
Source: CLIA web site