Kwale, Kenya: The introduction of levies on transit goods by some border counties may inhibit trade within the East African Community, The East African Affairs ministry has warned.
Principal Secretary Mwanamaka Mabruki said the move by the some counties to levy taxes on transit goods will hinder the community’s quest to create a seamless trade area and possibly lead to retaliations from other EAC members.
“Imposing taxes on goods going to the EAC members especially by the counties at the border is one of the tariff barriers that we are trying to solve. It is hindering trade and they will retaliate,” said Mabruki.
Kwale had in its 2014/2015 budgetary estimates proposed the introduction of levies on goods that pass through its jurisdiction en route to Tanzania and in the opposite direction.
Struck out
READ MORE
Tea farmers queue at banks for bonuses as low payouts spark tax protests
Of VAT and fuel; Inside William Ruto's gamble to keep pump prices low
But yesterday the county’s member of the budget committee, Omar Kitenge assured the government that those proposals were struck out saying: “We thought it would go against the Constitution.”
The County Government of Mombasa on the other hand is toying with the proposal to introduce a levy on all goods that pass through the port of Mombasa in a bid to broaden its revenue base. The county had proposed the introduction of $2 (Sh175 as per current exchange rates) for every tonne that passes via the port.
Mombasa Governor Hassan Joho has often insisted that the port is the biggest asset in Mombasa and the county should benefit from it. Any introduction of a levy at the port will automatically push the cost of imports through Mombasa and is bound to elicit sharp condemnation from EAC members using the facility.
The PS says that though he understands that counties ought to seek ways of raising revenue, the levies were not within the spirit of EAC integration, adding that the ministry is concerned that such moves could hinder smooth flow of goods and services.
She said the ministry will engage all the 47 counties and especially those at the borders to make sure they understand the Government’s plan and policy on the integration process. The PS was addressing a sensitisation forum on regional integration at a Mombasa hotel yesterday.
Mombasa, Kwale, Kilifi, Tana River, Lamu, Taita Taveta, Kitui and Machakos counties where being educated on the Government’s draft regional strategy and policy document which will guide Kenya’s participation in the regional integration process.
