Regional businesses want leather imports to pay more taxes

 

Businesses operating within the East Africa Community want governments to hike taxes on imported leather products to increase demand for locally manufactured shoes and bags.

Kenya, and generally the region, has been flooded with cheap products mostly from China and partly India, which have driven local players out of market.

The East African Business Council (EABC), in a new report, says that as a way of developing the leather industry, governments should penalise leather imports through higher taxes.

At the same time, the EABC report said exporters of raw hides and skins should also face higher taxes as one modality of getting local leather industry players to export more finished products.

EABC proposed that governments should “introduce a levy on imported footwear and leather goods (above the set common external tariff – CET – rates) and use it to finance the development of the fund to finance the value chain… (introduce) a levy on exports of raw hides and skins”.

The lobby also proposed that EAC partner states should form development finance institutions to work with industry to finance new investment through Special Purpose Investment Vehicles (SPIVs).

The report, which was produced by EABC and GIZ Programme, noted the EAC region processes leather up to wet blue stage with minimal transformation to finished leather.

Peter Mathuki, the chief executive of EABC, said the leather industry has failed to take off due to the high presence of imported used footwear as well as synthetic shoes.