How you’ll gain in the Common Market

This is the headline for the Daily Monitor Newspaper dated July 2, 2010. ‘Ground is leveled but you must brace for competition’, Dorothy Nakaweesi titles her article. She writes: If you are a teacher looking for a job, a trader ready to do business or a citizen looking for residence, you can freely enter any of the five East African countries because the ground rules have been leveled, at least on paper.

Yesterday, the five EAC member countries; Uganda, Kenya, Tanzania, Rwanda and Burundi concurrently ushered in the long-awaited single market trading bloc the Common Market.

To an ordinary Ugandan, this means accessing a job, providing a service, moving freely, and accessing a market of about 140 million people in the region.

It is interesting to note that on Wednesday June 23 2010, Kenya’s parliament passed a Bill allowing the country to return to price controls of essential food and fuel goods, after the policy was abandoned in the 1990s in favour of economic liberalization.

And the International Monetary Fund estimated that Tanzania’s economy is expected to grow by 6.7% in 2011 compared with an estimated 6.2% in 2010. The IMF said it expected inflation to ease to 5.0% by the end of June 2011, helped by declining food prices thanks to increased production.

To quote Dorothy, “the ground rules have been leveled, at least on paper’.The transition to the Common Market was a normal routine driven Thursday just like any other. It is the adoption of the different tax regimes to the Common Market that we are waiting for. Income Tax, Value Added Tax and Stamp and other duties and levies differ from country to country. The only unified law and procedure of taxation is under the Customs Management Act.

Import duty and Value Added Tax paid on importation have previously yielded high revenues for the East African Governments even if the final consumers of the goods ultimately paid the taxes. As the various tax consultants and tax policy departments deliberate on the best way forward, we wait for their recommendations and hope that Pay as You Earn will not be increased to fill the lacuna left by the scrapped taxes.

Or, maybe Stamp duty?


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