Written by Rosemary Wachiye and Phanice Pkemei
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Second-hand clothes commonly referred to as ‘Mitumba’ in Kenya are providing a cheaper alternative to locally produced or imported new clothes. This has made the second-hand clothes business one of the most lucrative informal businesses in Kenya.
However, this has led to the collapse of many clothe making industries in Kenya.
Finance minister Githae on Thursday delivered the country’s budget which didn’t have tax surprises, but many welfare measures that would cost KSh1.45 trillion.
The minister cut taxes on second-hand clothes, zero-rated duty on digital TV sets and removed tax on food supplements in an attempt to check the rising cost of living.
On the second hand clothes he had said, “The recent upward review by KRA of the minimum tax payable on imported second hand cloths from Ksh.1.1 million to Ksh.1.9 million per 20 Foot has forced dealers to reduce imports significantly. Consequently, businesses have closed down and millions of our people dependent on this sector as a source of livelihood, especially the youth, are now poor and vulnerable. In order to prevent further loss of business and employment that support millions of our people, I have instructed KRA to immediately revert back to initial valuation method.”
This was received positively from business men who foresee tremendous improvement in business once the law is implemented as they look forward to better business ventures.
They applauded the move by Finance Minister to except second hand clothes from being taxed in the recently read budget as citizen hearted since the product's main consumers are the common citizens.
“We are happy with the budget since it will make us reduce the prices of the clothes which will attract more customers and it will bring our business back to life again,” said Mr. Oliver Waswa, a second hand cloth seller from Webuye Town of Bungoma County.
They explained that the imposing of tax on those clothes in the previous financial year had affected the business and led to a large drop in the profits and even others opting out of it to secure more profitable business.
“The tax had led to high prices of bails of clothes from distributors which made us increase the prices of clothes which affected us negatively since most of our customers could not afford the new price and this led to a drop in business,” said Mrs. Gladys Kaluchi, second cloth seller.
However, the assistant Minister for Cooperatives Linah Jebii Kilimo has criticized the proposal saying it would hamper negatively cotton farmers especially from Kerio Valley in Rift Valley.
Kilimo said the country might fail in achieving its Vision 2030 in having its own industries to compete with the global market.
Speaking at Chesoi in Marakwet East while launching a cooperative organization for women SACCO she urged the finance minister to reverse the proposal with an aim of increasing raw materials for the cotton industries.
Subsequently, the common citizen dependent on such clothes, is not yet convinced as they claim that it’s a routine practice that each financial year during the reading of the budget, prices of goods are reduced but it never comes to pass.
They have paused a challenge to the government to ensure that all the proposals in the financial budget of the year 2012-2013 are implemented so that they will be able to believe in the budget.
“We are used to hearing the same sing song every time the budget is ready so we don’t really believe that the cloth prices will go down not until it happens. I challenge the government to ensure that all the proposed quotations come to pass,” said Mr. Walter Wasilwa a resident.
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