Mombasa’s push for cargo levy sets stage for row with shippers

Shippers are digging in for a fresh showdown with the Mombasa county government in its bid to push through an array of taxes on shipping lines rejected by industry players last year.

Through its Finance Bill 2016/17 currently undergoing public participation phase, the county has been lobbying industry players to accept its plan to collect Sh5,000 ($50) per 20-foot container and Sh9,000 ($90) for a 40-foot container as part of transport infrastructure development levies.

The county also intends to impose a penalty of Sh50,000 ($500) on shipping lines that fail to pay the levy.

Yesterday, Shippers Council of Eastern Africa (SCEA) chief executive Gilbert Langat said the proposed levy amounts to double taxation as shipping lines already pay taxes to the national government through the Kenya Revenue Authority.

He said the levy would also increase the cost of doing business at the Mombasa port.

“Last year, we rejected the levy as it was unjustifiable. We wonder why the county government has yet again factored the charges in the Finance Bill for 2016/2017,” he said.

Mr Langat said the county could not impose the container charges simply because the port is in Mombasa, adding that the facility was a national asset.

The proposed levy, he said, would make the international shipping lines pass the extra cost to importers and make the port expensive.

Mr Langat warned that importers from the neighbouring countries such as Uganda, Rwanda and Burundi as well as locals might relocate to Dar es Salaam port to avoid the tax burden. “It is our hope that the government will de-gazette the levy in case the county approves the Finance Bill,” he said.

Mr Langat called on the county chiefs to withdraw the levy failure to which the SCEA would move to court to block its implementation.

Last week, Mombasa Transport executive Taufiq Balala said the county would impose the levy to raise cash for funding road projects and rehabilitate the existing ones.

“It should be noted that 5,000 trucks which collect cargo from the Mombasa port daily damage our roads as well as cause traffic congestion,” he said.

Of the 1,200 kilometres of roads in the county, he said, only 300 kilometres were tarmacked, adding that was why the county sought to the funds for infrastructure development.

Last month, Infrastructure PS John Mosonik said in Mombasa alone, the government spent Sh30 billion on roads including the 10-km Miritini- Kipevu road which when completed is expected to ease transportation of cargo from Mombasa port.

The road construction, which is part of phase one of the Sh11 billion Dongo Kundu bypass project, would be completed in July next year, according to Mr Mosonik.

The PS said Miritini-Kipevu road would also help address traffic congestion between Miritini and Changamwe once completed.

“The road will boost transportation of cargo from the Mombasa port to Nairobi and the neighbouring countries of Uganda, Rwanda, Burundi, South Sudan, the Democratic Republic of Congo,” he said.

Mr Mosonik said the government was holding talks with the Japenese government through JICA to secure funding for the phase two of the Dongo Kundu bypass project.

The government is also building a road from Port Reitz to Changamwe at a cost of Sh3 billion set for completion in June next year.

The road is expected to address traffic congestion between Moi International Airport and Mombasa town.
The government is also constructing a dual carriageway from Kwa Jomvu to Makupa Causeway at a cost of Sh7 billion.

Tenders have been awarded and the building of the road set to begin in the next two months.

“We have also awarded a contract worth Sh1 billion for the expansion of the road from Magongo to Kwa Jomvu in Mombasa,” he said.

Mr Mosonik said the government was finalising the funding of the construction of a dual carriageway from Kwa Jomvu to Mariakani which will cost Sh7 billion.