Taxes drive Kenyans to Tanzania
A loaded bodaboda on the Lunga lunga-Mombasa Highway from the One Stop Border Post in Horohoro on September 6, 2019. Kenyans in areas bordering Tanzania are sourcing basic items from the neighbouring country.
Kenyans in areas bordering Tanzania are sourcing basic items from the neighbouring country after the government gazetted new stamp fees on 14 categories of goods last week.
Some of the products are getting into the country illegally, costing the government millions of shillings in revenue.
Businesspeople in Lunga Lunga, parts of the South Coast and Taveta are buying basics like cooking oil, sugar, soap, detergent and maize and wheat flour from Tanzania at cheaper prices compared to Kenya.
Ms Veronica Mwadime, a Taveta local, said the value of Kenyan shilling in Tanzania is strong, making them buy goods there.
“One Kenyan shilling is equivalent to about 18 Tanzanian Shillings. A five-kilogramme bag of maize in Tanzania is Sh400 compared to Sh600 here,” Ms Mwadime said.
Kenyans also cross into Tanzania to get cheaper beer and other alcoholic drinks.
Cosmetics and tobacco
Some traders from both countries are making astronomical profits by smuggling the basic items into Kenya.
“More than 40 per cent of my cooking oil, rice and flour stock is Tanzanian. Businesspeople get these items at cheaper prices across the border. I buy from suppliers who bring in the goods legally and have receipts to show,” Mr Ali Noor, a Taveta trader, told the Sunday Nation.
Goods are sneaked into Kenya through Lunga Lunga, Holili and Horo Horo border points, the Sunday Nation team was informed by traders and residents.
Early in the month, Kenya gazetted new stamp fees on 14 categories of goods.
The decision widened the gap between stamp duty paid by manufacturers and importers in Kenya on one hand and those in Tanzania, Uganda and Rwanda on the other.
The huge gap has put the Kenya Revenue Authority (KRA) on the spot, amid concerns about a boom in smuggling.
The Kenya Association of Manufacturers (KAM) said the rise in stamp duty is beyond the market cost of production and would have detrimental effects on consumers and businesses.
“Manufacturers warn that the increase in stamp duty will lead to a boom in smuggling the cheaper-priced products from Kenya’s neighbours,” KAM said.
Kenya’s charges the highest duty in the five countries despite the Electronic Goods Management System being managed by the same company – Security Solutions SA of Switzerland.
The excise duty on beer has risen from Sh1.50 to Sh3, spirits from Sh2.80 to Sh5, juice from Sh0.6 to Sh2.20, cosmetics raised to Sh2.5 from Sh0.6 while that on tobacco is Sh5 from Sh2.8.
Businesses in Tanzania pay a stamp duty of Sh0.96 to Sh1.21 on beer, Sh2.21 on spirits, Sh1.26 on juice, Sh2.21 on tobacco and nothing on bottled water and cosmetics.
In a recent interview, KRA Southern Region Coordinator, Joseph Tanui, ordered the immediate seizure of goods illegally entering the country.
He said the government is doing all it can to dismantle smuggling syndicates and urged locals to report the culprits.
Mr Tanui said smugglers are using unofficial routes, boats and motorcycles to bring the goods into the country.
He said KRA has launched awareness campaigns targeting border communities to change their attitude and perception towards taxation.
“KRA is determined to detect and disrupt tax evasion and prosecute criminals who engage in concealment and smuggling of goods. We will ensure individuals pay their fair share of taxes,” Mr Tanui said.
