Truck owners demand tax relief on trailers

Tanzania Truck Owners Association (TATOA) has proposed that the 2015/16 financial bill be amended to maintain current tax relief on trailers, saying the levies will undermine growth of the sub-sector.

The association urged the Parliament not to accept such proposals as they will reduce the potential of the sub-sector that has grown at an average of 17 per cent for over a decade.

TATOA said in a statement that they were neither involved nor asked for opinion on the decision to remove exemption on trailers, a move that caught them unaware.

“It is prudent for the ministry to involve stakeholders prior to budget presentation to ensure they are aware of the trend of the budget and other fiscal measures,” the association said in the statement issued at the weekend.

The minister proposed imposition of taxes in a generic manner to trailers without specifying the specific types of trailers, targeted in a bid to protect local trailer assembly companies - for carriage of containers and tankers.

“They (manufacturers) do not assemble specialised trailers that are currently in high demand to be used in transportation of equipment in mines as well as the booming oil and gas sector,” TATOA said.

It said the perceived protection will actually not boost growth of the manufacturers of trailers but instead, those assembling trailers using imported materials.

Currently, TATOA argued that newly imported trailers were of the better quality and lower priced than locally assembled trailers.

A locally assembled flatbed trailer costs between 28,000 US dollars and 35,000 US dollars each, while an imported flatbed costs between 11,000 and 18,200 US dollars.

Both have similar TBS standard as the locally assembled trailer. On the tanker trailer a locally assembled costs an average of 60,000 US dollars, while an imported tanker costs maximum of 42,000US dollars.

“Therefore the intention of the bill will still be rendered useless while promoting excess US dollar expenditure and greater balance of trade deficit,” the statement said.

According to them, the local transporter saves 13,000 US dollars to 21,000 US dollars for every flat bed trailer purchased.

“To remove exemptions on trailers is simply to allow the local trailer assemblies to profit beyond reasonable margins at the expense of the tax payer who will eventually bear the burden of balance of trade deficit,” TATOA said in a statement.

The truck owners also opposed the proposed tax increase in fuel and want it to be dropped as it will remove the country’s competitiveness in the SADC and EAC regions.

The fuel raise represents an increase of 100 per cent for levies in petrol and diesel and 200 per cent in kerosene. Most trucks use diesel and this represents an increase in transport cost by 34.95bn/-.

On the other hand, the bill also proposed an increase in fuel and road tax by 50/- per litre for both diesel and petrol meaning transport cost jumped up by 68.19bn/-.

‘Cumulatively,’ TATOA said, the proposed increase in taxes and levies on fuel are estimated to cause increase in transport cost by 103.14bn/-.

TATOA also said fuel is imported using the dollar that has risen by more than 13 per cent over the last one month; by 19 per cent over the last three months; by 33 per cent over the last one year and by 54 per cent over the last 5 years.

“The stronger dollar removes any advantages we could have got as a nation from falling fuel prices. The dollar is likely to get stronger against the shilling and a wise decision in this case is to reduce instead of increasing taxes on fuel,” TATOA said.
Source: Daily News, reported from Dar es Salaam, Tanzania
Share on Google Plus

About Abduel Elinaza

This is a short description in the author block about the author. You edit it by entering text in the "Biographical Info" field in the user admin panel.