The Tanzanian government says it hopes to boost productivity by scrapping 17 taxes and levies that were charged for the buying, processing, marketing and selling of coffee to local and export markets.
Agriculture, Livestock and Fisheries Minister Charles Tizeba said the review followed numerous complaints from farmers and value chain stakeholders who said the multiple taxation regime was pushing farmers out of coffee farming and contributing to a nationwide slump in production.
The scrapped taxes include the US$1 000 fee for an annual coffee export licence, US$250 for a coffee processing licence and US$1 000 for the purchase of parchment dry cherry coffee.
Tizeba also presented a 10-year national coffee sector development plan, which is designed to increase annual coffee output from about 50 000 tons presently to at least 100 000 tons by 2021.
According to the Tanzania Coffee Board (TCB), coffee accounts for nearly 5% of the country’s annual export earnings, raking in an average of US$100 million. An estimated 400 000 smallholder farmers produce 90% of the crop to make Tanzania the 4th largest African producer after Ethiopia, Ivory Coast and Uganda.
Tax reforms in the coffee sub-sector began on July 1 this year when government scrapped 108 taxes that affected crop farmers, cattle producers and fishermen.
The legislative reform process began in May and has to date scrapped 80 out of 139 taxes that were levied on crop farmers, 23 on livestock producers, 17 for coffee producers and 16 on the sugar industry.
Further, the government has scrapped all 20 taxes that were previously levied on various agricultural projects by the Tanzania Cooperative Development Commission (TCDC).
The tobacco sub-sector was relieved with the scrapping of the annual licence fees of US$4 000 for buying flue-cured tobacco (VFC), US$4 000 licence for buying dark-fired cured tobacco and US$4 000 for tobacco exporters.
Government has also scrapped the US$3 500 per annum fee charged for buying flue-cured tobacco at district level, a licence application fee of US$100 and the US0.001 per kilo sales tax that was charged by the Tobacco Council Fee.