Treasury Division withdraws a tax proposal to guard furnishings producers

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Treasury Department withdraws a tax proposal to protect furniture manufacturers

Chief Administrative Secretary (CAS) for the National Treasury and Planning Nelson Gaichuhie. [Boniface Okendo, Standard]

The National Treasury has flipped its plan to increase taxes on imported furniture, measures aimed at growing local industries.

The Treasury Department said last year it supported a bill to amend the Excise Duty Act and impose a 30 percent excise duty on imported furniture.

Kiambu MP Jude Njomo’s bill aims to boost the local furniture industry.

In its submission to parliament last October, the Treasury Department argued that it would support the law as long as it is protected by the bill. Since then, the mood has changed, saying that import duties on furniture entering the country are enough to protect local operators.

Nelson Gaichuhie, Chief Administrative Secretary of the Treasury (CAS), said the state uses import tariffs to protect local industries, noting that the industry is already paying this at a rate of 35 percent.

“As the Treasury Department, we use import duties to protect local manufacturers. There is already a 35 percent duty on imported furniture, ”said Gaichuhie when he appeared before Parliament’s Finance and National Planning Committee.

He said the industry was heavily taxed, noting that the introduction of domestic taxes like excise duties was “inadequate for protecting local industries”.

The CAS said the excise tax would stifle regional trade and other EAC partner states could fight back. He cited a recent case where the Treasury Department imposed excise taxes on imported glass products, but the court overturned them.

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“There have been attempts to impose excise duties on imported goods. This has not been successful and it is also against the protocols of the EAC countries,” he said.

Committee chairman Gladys Wanga questioned the Treasury Bill’s amendment to the bill, noting that the Treasury Department appeared to be mitigating its position on taxing foreigners but had no sympathy for the Kenyans.

“When the bill was tabled in the pre-release stage, the Treasury Department filed filings and supported the bill. It’s a joke to come back and say that you don’t support the bill,” she said

She said most furniture imports were from China and wondered how the excise tax on imported furniture would hinder regional trade.

Other committee members registered their displeasure with the Treasury Department when Kitui Rural MP David Mboni questioned the state’s offer to promote the “Buy Kenya Build Kenya” brand.