The fate of uniform tax cuts for firms in East Africa hangs in the balance after the region’s presidents postponed Wednesday's forum organised to make the commitments.
In a statement to newsrooms, the regional bloc said the meeting convened to discuss the coronavirus pandemic via video conferencing had been postponed to a later date at South Sudan’s request.
“The 18th Extraordinary Summit had been called by chairperson Paul Kagame, specifically to exchange on the regional response against Covid-19, including its fiscal, economic and social consequences on the Community,” the EAC Secretariat said in the statement.
Ahead of the meeting, the secretariat had proposed an array of incentives aimed at boosting resilience of firms and cushioning low income households.
They include reduction of imports tariffs on essential goods and inputs to boost access to basic goods.
Currently, the region’s three- band common external tariff has an upper limit of 25 percent on finished goods, and a downward review could help citizens enjoy cheaper commodities.
The secretariat said it had finalised an EAC Covid-19 Response Plan and was developing the EAC Recovery Strategy based on a regional approach to help economies recuperate from the scourge.
“Enterprises across sectors including the agro-industry and particularly the informal sector are suffering. Value chains have been disrupted and tourism, a major source of income in the region, has come to a complete stand-still,” said the secretariat setting the tone of the leaders’ meeting.
“It is against this backdrop that the East African Community Secretariat calls upon Partner States to immediately commence developing National Economic Recovery Plans,” it added.
Other measures proposed include reviewing policies on trade, and domestic taxation on essential goods produced locally as well as assessing the potential impact of exchange devaluation.
The secretariat also wants countries to institute stimulus packages to boost local production and promote imports substitution. It also wants them to apply monetary and fiscal measures to counter inflationary pressures.
Kenya has already implemented some of these measures by cutting down on income tax and abolishing it altogether for workers earning less than Sh24,000 a month.
The country has also reduced the Value Added Tax from 16 percent to 14 percent to easy the consumers burden at a time when many household are struggling with financial needs.