Tanzania has reintroduced value added tax on sanitary products after research showed that scrapping of the tax last year has not helped to lower consumer prices in the domestic market, according to Deputy Finance Minister Ashatu Kijaji.
“Instead of the anticipated outcome, domestic factories reduced production due to the tax factor, resulting in job losses,” Dr Kijaji told parliament while explaining the controversial reinstatement of the VAT in the 2019/2020 budget.
The government has sought to appease local manufacturers of sanitary pads by lowering corporate tax from 30 per cent to 25 per cent for new investors in the industry for two years.
“We will also extend a similar benefit to existing producers from July 1 this year through to 2021,” she added.
The move is aimed at reducing dependence on imported products and increasing domestic production, which should lead a drop in prices, said Dr Kijaji.
She said the research was conducted by the Ministries of Finance and Industry, and the Fair Competition Commission.
Vocal opposition politician Zitto Kabwe criticised the government’s move, saying indicative prices should have been introduced to foil unscrupulous traders.
“Menstruation is a biological issue and bringing back VAT is an injustice to women, especially low income earners,” Mr Kabwe said.