{{The cost of goods imported from outside the East African Community could rise from June this year as the regional bloc plans to introduce a new import levy to finance the Secretariat’s growing budget.}}
The proposed one per cent levy will be an additional charge on the existing import taxes. This could raise the prices of goods shipped from outside the bloc’s five countries — Kenya, Uganda, Tanzania, Burundi and Rwanda.
The prices of commodities such as fuel, food, cars, machinery and second-hand clothes — the most common goods sourced outside EAC — are likely to go up.
The total value of EAC member states’ imports from outside the region amounted to $34.29 billion in 2012, therefore the Secretariat could collect up to $342.9 million from the levy.
The proposal, which was approved by the EAC Council of Ministers and recommended to the Heads of State Summit in November last year, is expected to be considered during the Ordinary Summit scheduled in Nairobi this April.
The Council of Ministers is said to be working on rollout details, as the bloc seeks to wean the Secretariat of heavy reliance on contributions from member states, donations and donor funding.
Inconsistent and inadequate flow of contributions from member states has constrained many crucial activities of the EAC executive arm, including the negotiation of an Economic Partnership Agreement with the European Union.
The new funding mechanism is expected to enable the EAC to meet its budget, largely funded by donors. For example, of the $117.5 million 2013/2014 budget, partner states contributed $37.2 million while donors gave $79.8 million.
The proposed 2014/2015 budgets stands at $134 million — 2.4 per cent higher than the previous year’s. Each EAC partner state will be required to contribute $45 million, a 19.0 per cent increment from last year’s contribution.
However, the EAC development partners will in the 2014/2015 budget contribute a total of $83.8 million, a drop of 4.8 per cent.
The donors, who include Canada, Denmark, Finland, France, Germany, DfID-UK, the European Union, the World Bank and Norway, however, finance their programmes directly instead of giving the grants to the Community.
After it became apparent that fundraising remains the Community’s biggest challenge, early last year, a team of experts was appointed from all the partner states to explore sustainable funding mechanisms that would guarantee that the bloc is able to raise adequate resources, and ensure that equitable funding and remittances are made on time to the Secretariat.
Among the proposals was one that contributions be based on the member states’ gross domestic product and introduction of an airline tax.
{EastAfrican}
Leave a Reply