High tax rates affects consumers of alcoholic drinks, claims CTI

THE Confederation of Tanzania Industries (CTI) has said that, the recent increase of the 25 percent tax which the government had imposed on alcoholic drinks for 2012/13 financial year has affected consumers of such products in the country. Claims by CTI come barely after four months have passed.

CTI Chairman, Felix Mosha said recently in Dar es Salaam that, the tax increase has reduced the purchasing power of consumers as the retail prices of such products are sold at a high price rate which is unaffordable by most consumers. He also noted that, consumers of tobacco related commodities such as cigarettes and some soft drinks are facing hard time as they have to fetch deeper into their pockets to afford such commodities since the tax increase of the 20 percent was imposed on such products in this year’s budget. The CTI boss was highlighting various challenges facing manufacturers when he addressed industrialists in the country during the award giving ceremony to honour best manufacturers of the year 2012, the ceremony was attended by President Jakaya Kikwete at Serena Hotel in Dar es Salaam. He dismissed claims that, his organisation always speak in favour of their members during the time when the budget session is in discussion to deliberate the outcome for the next financial trading period, but noted that, claims by CTI on tax structure proposals is always considered by looking at the national economic estimates. For example he said that, the budget proposals issued by CTI during 2011/12 fiscal year targeted main challenges that faced the industrial sector during 2010/2011 trading period. If the government could consider their budget proposals of that time, definitely the industrial sector would grow up by 10 percent contrary as it now growing at a rate of 4 percent, he said. Due to little money which the government has been collecting year after year from the tax payers to its coffers, it has now developed the tendency of increasing income tax mostly on luxurious commodities such as alcoholic drinks, cold drinks, cigarettes and etc. By increasing taxes on these commodities there is a definite decrease in sales which ultimately results into low sales that determines poor profit margin with which manufacturers can no longer manage to meet operational costs, thus resulting into lower government revenues. However, he appreciated the role being played by various institutions such as TBS and Fair Competition Commission (FCC) of ensuring that, they supervise and fight against counterfeit products so as to allow fair business transactions for the sake of defending consumers in the country. Despite of this, however, he noted that although such institutions are similar in executing their duties, but the most disappointing thing to note is that, they have increased bureaucracy in their work performances among them. Either such institutions have been charging higher tax rates in order to meet their operational demand, thus they increase the cost of doing business. He gave an example of Fire and Rescue Force which in recent days it had increased its normal fee structure from Sh. 300,000 to Sh. 9 million. He regarded such institutions for not organizing their operations fairly as wherever there is a slight increase imposed by the government, they also tend to increase their operational fees to businessmen beyond expectation. In view of this, the CTI has requested the government to look more critically the operations of these institutions and make sure that, they should be integrated together so as to reduce the unnecessary operational costs likely to occur in business dealings in order to attract both foreign and local investors. “It is now high time for the government to finance operational costs of these institutions so as to let them work more efficiently and with seriousness rather than changing their services to be the main sources of their operational income”, he said.