The private sector in East Africa under the umbrella organisation, East African Business Council (EABC) has asked governments to reduce import duty on paper and its products to cater for the current shortfall in the market.

The tax proposal contained in pre-budget proposals presented by EABC to East African Community Partner States ahead of  June budget reading is a result of the collapse of Pan Paper Mill that supplied paper in the region.

Pan Paper, the biggest paper mill in the region supplying paper inputs to local industries, in February this year suspended operations, putting a strain on the region’s paper supplies.

Now manufacturers and paper converters who used to source their inputs from the paper mill wish to be allowed to import the same inputs at 10 percent instead of 25 per cent for specific period as the Mill remains closed.

"This will allow them to remain competitive,” Adrian Njau, the Trade Economist of EABC, said.

"The Paper converters cannot get any more supplies and therefore there are no local supplies of this type of paper.”

Cement manufacturers, on the other hand, are calling for increase in tariff on imported cement to protect local industries from unfair competition posed by cheap and subsided imported cement.

"Removal of sensitive status by reducing import duty from 40 percent to 25 percent has negatively affected the local cement producers,” Njau said.

"We want governments to reinstate the sensitive status by increasing import duty from 25 percent to 35 percent”

It was agreed that the applicable duty rates reduce by 5percent  annually from 55 percent  in 2005 to 50 percent  in 2006 to 45 percent  in 2007 to 40 percent  in 2008 and to 35 percent  in 2009 to accord appropriate protection to the existing cement manufacturing capacity in the region.

"This will perhaps attract potential investors in cement factories in the region, create employment and increase capacity utilization and expansion of local cement producers,” Njau said.

Other tax proposals include increase of import duty from 10 percent to 25percent on road tractors for semi-trailers, reduction of duty rate on unprinted aluminum foil from 10 percent to zero. 

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