Rotich burdens mitumba users with higher tax

Tax on secondhand clothes raised. FILE PHOTO | NMG 

Treasury secretary Henry Rotich has slapped imported clothes and shoes with higher import duty to protect local textile companies and create jobs for young people.
Textiles and footwear will now be subject to an import duty of $5 per kilo (previous $0.2 per kg) or 35 per cent, or whichever is higher. The average price of imported second hand clothing is Sh96,132 a tonne, and the provisional value of total secondhand clothing imported last year is more than Sh5.3 billion.

“Our textile and footwear sectors are closing down due to increased unfair competition from cheap imported textiles and footwear,” said Mr Rotich in the 2017-2018 Budget in Parliament.

He said the high taxes will guard against the low prices of imported goods which make it difficult for local clothing and footwear companies to thrive.

While local production of textile clothing will create employment, there has been anxiety about the loss of thousands of jobs within the mitumba industry.

In the past, EAC member states have proposed a ban on importation of second hand clothes. However, they backed down after the US threatened to suspend Uganda and Tanzania from duty-free access to the US and Agoa. Rwanda currently faces a ban.

Kenya has instead opted to use tax measures and incentives to encourage the growth of local industries.

In the budget, Mr Rotich allocated Sh400 million to stimulate textile development within the country. Additionally, textile manufacturer Rivatex will receive Sh1.4 billion from the Treasury, over three times the Sh450 million it was allocated last year.

According to the Economic Survey 2018, the textile sector recorded a decline of 1.7 per cent last year but production of wearing apparel increased 5.6 per cent due to a growth of 10.4 per cent in the production of T-shirts.