When the finance ministers of Uganda, Kenya and Tanzania banned in their 2006/2007 financial year budgets, the manufacturing of polythene bags of less than 30microns, Ugandan manufacturers thought they would still be in business.
It was expected that all the three countries would impose the ban at the same time and also impose a tax of 120%. However, the manufacturersâ€™ dream is not coming true because as they stopped manufacturing the polythene bags of less than 30 microns and are supposed to pay excise duty of 120%, their counterparts in Kenya did not. Instead, the Kenyans are manufacturing them and label them â€˜for exportâ€™ so they end up on the Ugandan market.
â€œThe 12 members of the Uganda Manufacturers Association (UMA) involved in the polythene business cannot afford to pay the 120% levy because they are not selling due to the smuggled products from Kenya,â€ says the associationâ€™s executive director Gideon Badagawa. â€œWe attribute the problem to the delay by the three countries to harmonise their positions. This has led to an imbalance that has created a lucrative environment for smuggling buvera in Uganda,â€ he says.
â€œAccording to the amended Provisional Collection of Taxes and Duties Act 2008, the Kenyan government issues licences to manufacturers of plastic bags of less than 10 microns if they are for export and 20 microns if they are for industrial use only,â€ he said
The country has also kept extending suspension of the 120% excise duty and decided to refund 120% on plastics produced for manufactured products.
Tanzania has categorised buvera into only two categories for purposes of taxation; plastic shopping bags on tariff code 3923.21.10 and the other plastic packing bags on tariff code 3923.29.10.
â€œOnly the first category incurs the punitive tax but not the second one,â€ he says.
Smugled polythene bags stifle local production