This archive report was first published on 29 June 2019.
On June 29, 2019, Tanzania's Deputy Finance Minister Ashatu Kijaji announced the reinstatement of value added tax (VAT) on sanitary products, a move aimed at increasing domestic production and reducing dependence on imported products.
According to Dr. Kijaji, research conducted by the Ministries of Finance and Industry, and the Fair Competition Commission showed that scrapping the tax in the previous year did not lead to lower consumer prices in the domestic market. Instead, domestic factories reduced production, resulting in job losses.
Government Incentives for Local Manufacturers ¶
To appease local manufacturers of sanitary pads, the government has lowered corporate tax from 30% to 25% for new investors in the industry for two years. Existing producers will also benefit from this tax reduction, effective from July 1, 2019, to 2021.
The move is expected to increase domestic production, leading to a drop in prices. However, opposition politician Zitto Kabwe has criticized the government's decision, arguing that indicative prices should have been introduced to prevent unscrupulous traders from taking advantage of consumers.
Menstruation is a biological issue and bringing back VAT is an injustice to women, especially low-income earners - Zitto Kabwe
The reinstatement of VAT on sanitary products is part of the 2019/2020 budget, which aims to promote local industries and reduce reliance on imported goods. The government hopes that this move will lead to increased domestic production and lower prices for consumers in the long run.
