FINANCE Minister Ezra Suruma has promised to try and reverse the increase in tax on mivumba or secondhand clothes in response to an appeal from city traders.<br>Taxes on mivumba have more than doubled following the introduction of the Common External Tariff.
FINANCE Minister Ezra Suruma has promised to try and reverse the increase in tax on mivumba or secondhand clothes in response to an appeal from city traders. Taxes on mivumba have more than doubled following the introduction of the Common External Tariff.
The URA has now temporarily reverted to the old import duty rate for mivumba pending the next meeting of East African trade ministers in March. Tanzania has apparently done likewise. There are good reasons for keeping down the duty on mivumba. Almost everyone in Uganda dresses with mivumba. Tens of thousands of Ugandans earn their living from the trade. Local factories are not capable of supplying the Ugandan market. Indeed two years ago the IMF representative argued forcefully in the New Vision that it made good economic sense to keep the duty on mivumba low. The ability to purchase cheap attractive clothing would then act as an incentive for Ugandans to concentrate on production in areas where they were globally competitive. This is absolutely correct. However there is a huge danger in starting to renegotiate previously agreed tariffs for the community. The three members will start fighting among themselves. It was only with great difficulty that the Uganda government got Tanzania and Kenya to accept a five-year waiver of import duty on Schedule 4 raw materials earlier this year.
If we now start renegotiating tariffs on various products, there is a real danger that the whole CET will unravel. If we want to keep the CET and build a bigger East African market, we should swallow a bitter pill and maintain the mivumba duties as they are.