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Govt to consider import tax exemption for NIDA
2006-04-11 09:13:05
By Judica Tarimo
The government yesterday expressed reservation on the validity of a 25 per cent import tax exemption application for raw material by NIDA Textile Mills Limited.
Three cabinet ministers and top officials from the Confederation of Tanzania Industries (CTI) visited the production plant of NIDA Textile Mills, a subsidy of Namera Group of Industries, to assess its capacity, prior to making a decision on the tax exemption application.
The ministers included Zakia Meghji ( Finance), Dr. Juma Ngasongwa (Planning, Economy, and Empowerment) and Nazir Karamagi. (Industries and Trade Minister).
CTI Chairman Reginald Mengi, led a team of officials from the confederation during the tour.
NIDA has already submitted its two-year import tax exemption application for wide cloth, textile raw materials used for the production of bed sheets and related products for the local market.
’Once we get such exemption, we can produce more textile products. The market is readily available, necessary machines and technology are already in place,’ said Taher Kureshi,General Manager, Namera Group.
Kureshi said the exemption would help them enhance production of bed sheets and related products for local market, and thus create jobs and contribute to government revenue.
However, during the tour, the Finance Minister, questioned the viability of the two-year tax exemption application saying the government stands to lose revenue.
Gray Mgonja, Permanent Secretary, in the ministry of finance, estimated that the government would lose a total of US$ 9m/- if the two-year tax exemption was granted.
CTI Chairman, Mengi said that materials needed by NIDA in its production could easily be produced by local firms based in Arusha, an argument that was backed by the finance minister.
’I have some reports showing that Arusha-based factory, Sun Flag, can produce such type of raw materials for NIDA. There is no need of importing materials, which are available in Tanzania,’ said the finance minister.
Some industrialists and other stakeholders are optimistic that the Arusha firm has the capacity to produce wide cloth material used in the production of bed sheets, a view opposed by NIDA officials.
’They (Sun Flag) do not have the capacity to produce and supply to us the raw materials. Such materials can hardly be obtained in Tanzania,’ said Kureshi during the deliberations.
But finance minister said the government would scrutinize the tax-exemption application by NIDA before passing a verdict.
’We need time and space to study the practicability, implications of the exemption application and all issues raised here before making a decision,’ said Meghji.
But the CTI chairman asked the government to move carefully in order to strike a balance in its decision to avoid destabilizing the industrial sector.
’Yes! We need industries to progressively prosper and increase productivity capacity, but we have the duty and responsibility to ensure that there is level playing field among all players.
That’s what I want to insist Madam Minister, as you are deciding on the issue,’ Mengi told Meghji.
On his part, Karamagi concurred with Mengi, saying the final decision would underscore the issue of fairness among players in the textile industry.
’In any decision we are going to make, the government would be keen to ensure the industry is not tilted against or in favour of anyone,’ said the minister.
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