Home Headlines Customs tariff doesn’t increase costs 

Customs tariff doesn’t increase costs 

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After all, the complaints raised by the announcement of the Government to propose to the Assembly of the Republic a one-off review of the Customs Tariff on imports of horse mackerel, clothing and used vehicles in a range of measures covering the printing industry are nothing more than a false alarm, resulting from information deficit. 

In fact, the review does not aggravate any fees. It is only a correction of some of the inaccuracies that the tariff under review is denouncing. 

Starting from horse mackerel, the fishing resource of choice for the majority of the disadvantaged population, its importation will continue to be exempt from any tax, provided it is imported from neighboring countries, by the way potential and traditional suppliers, namely Angola and Namibia, under the Protocol Free Trade Area in the Southern African Development Community (SADC) region. 

However, anyone who wants to eat horse mackerel imported from outside the region will have to pay a 20 percent consumption tax. On the other hand, almost 98 percent of the population of Mozambique comes from Angola and Namibia, and only a small percentage (2 percent) is from the rest of the world, from outside the SADC region. 

Prior to the revision, this small percentage also benefited unfairly from total exemption, an anomaly which is now intended to be remedied by the revision suggested to Parliament by the Government. This procedure will oblige importers to submit the certificate of origin, a practice which was not observed. 

Regarding the used clothes, what will happen is the payment of 25 meticals per kilogram of imported clothing, with the perspective of helping to rescue the textile and clothing industry. This is a relevant sector for the generation of employment. It is enough to exemplify that in 1995 the sector of the textile and clothing industry employed about 8,000 workers against about 1500 at present. It should be noted that 1995 was not even the peak period for this sector. 

In the recent past, the Government approved an industrial policy and strategy, which elects priority sectors. Because manufacturing has a range of industries, some priority sectors have been selected. Some of the factors that have influenced the selection of the industries chosen are the potential for employment generation, contribution to import reduction (unnecessary spending of foreign exchange), contribution to linking the value chain of domestic primary products, linking power with other industries. This range of criteria conferred first choice on the textile and clothing industry. 

However, it is seen as one of the constraints to the development of this industry, the abundance of used clothing in the national market, which competes and in almost disloyal way with national production and jobs that could be generated. 

The textile and clothing industry has a tradition in the country, which has however been lost in time due to various factors. It has already been a robust sector with its market and full capacity to respond to the needs of the country. 

The proposed measures can help to rescue the sector, since they represent a stimulus for attracting domestic and foreign investment. The few revitalized units operate only to export to the region and still do not explore the domestic segment. The creation of capacity for the transformation of the national raw material (cotton), from fiber to clothing, stimulates the production chain that generates jobs and also the manufacturing chain, which is also the largest generator of jobs. 

For the time being the proposal of scrambles in the Customs Tariff does not prohibit import of used clothes. The perspective is to take into account the balance between the need for domestic production and to ensure availability of used clothes for the population. The most burdensome measure would be to introduce a surcharge in percentage terms. But this is not the route one intends to use, the proposal is adding 25 meticals for each kilogram of imported used clothes. The consumption tax set at 20 percent is also maintained. 

The printing industry is part of the batch of the sectors covered by the new industrial policy and strategy. It is from this perspective that the Government proposes to Parliament that the materials used by the printing industry will benefit from a significant reduction in customs duties, from the current 20 per cent to 7.5 per cent. This proposal intends that the printing industry be more competitive and can compete with external production. 

In the sector of used car, the proposed amendment says that cars under seven years will see tax burdens go down, while those older than seven years will keep current charges, so there is no further deterioration. On the contrary, there is a gain for importers who opt for vehicles less than seven years old. 

Mozambique is not innovating in the modality it proposes, since countries in the region have taxed cars older than 5-12 years in 150 percent of tax burdens. 

Developed countries simply prohibit the importation of used cars, that is all and that is enough! Not even if is a new used car. Are only imported new cars. 

In 1996-1997 the Government implemented a measure under which prohibited the import of cars older than five years. Comparing this measure to the revision of the proposed Customs Tariff will be said that the position of the Executive is mild or very benevolent, because it could have been extreme. In the case in haste we are not faced with an import ban. 

Under normal conditions a country cannot follow the example of Mozambique, which still allows importing all types of vehicles of all ages, making the country, in the short and medium term, a car cemetery that one day will not know what to do with them. 

Although the country has not yet reached the extremes of environmental pollution, used cars significantly increase the phenomenon, because these cars are prohibited to be driven in their countries of origin, and prevention is not a crime! 

It is a class of vehicles that also increase the road insecurity, since some of them, possibly not few, arrive to Mozambique with hidden problems. 

It would be in the right of the Government to simply prevent the entry of vehicles with a certain age, which is not proposed. Countries that prohibit the import of second-hand cars go further by limiting brands to safeguard foreign exchange capacity to secure accessories for maintenance. The proliferation of brands implies greater expenditure of foreign currency in the importation of parts and does not facilitate the specialization of personnel that will handle a varied range of brands. 

Ultimately the proposal aims to stimulate the acquisition and use of cars under seven years, with a proposal to reduce by five percentage points the rates currently practiced without discrimination of age. 

At present, a Vitz-style car less than five years old is exempt from excise duty. The same vehicle when is above seven years will have to be subject to the specific consumption tax, being the minimum value of five percent. (x) 

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