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Budget 2009/10 - Manufacturing Sector Highlights
| At this difficult economic time, we must be seen to care by supporting our industries to continue in business. In this regard, the Minister for Finance proposed several tax measures in support of the Kenyan Manufacturing Sector with a view to making them competitive.
First, to lower the cost of production for those manufacturers who use industrial sugar, the Minister proposed to remove the Sugar Development Levy on refined industrial sugar imported by gazetted manufacturers under the duty remission scheme.
It is expected that this measure will be passed on to consumers by way of lower prices in order to make our products competitive both locally and in the regional market.
Second, industrial development in the country holds the key to our economic development. To encourage industrial growth and reduce the cost of manufacturing, the Minister proposed to grant exemption of import duty on all industrial spare parts which will be managed through the duty remission scheme.
Third, the Minister proposed to remit all import duty on raw materials for the manufacture of sanitary towels to make them cheaper and available locally, considering that imported sanitary towels and tampons are already duty free.
Fourth, the Minister proposed that, since our leading paper mills have been experiencing operational challenges in the recent past originating from imported cheap and subsidized paper and paperboard products, and In order to cushion the mills and to enable them compete with these imports, he proposed to grant a remission of duty on inputs for use by paper and paperboard mills.
Fifth, the Minister noted that, in the recent past we had witnessed an upsurge in accidents on our roads leading to loss of innocent Kenyans, not to mention the other incidental costs to the economy occasioned by these accidents.
To safeguard against this situation, and also to promote our local manufacturers Minister proposed to remove import duty on asbestos fibres used in the manufacture of brake linings and pads.
The Minister also noted that, our textile industry has huge and untapped potential which need to be exploited to cloth our people, create employment and export to earn foreign exchange. In addition to the on-going efforts by the Government to implement measures to revive the cotton industry,
The Minister proposed to reduce import duty on all synthetic yarns, acrylic yarn, polyester yarn and high ferocity yarn from the current rate of 10% to 0%. Finally and in order to encourage the expansion of cotton sector, the Minister proposed to zero rate VAT on locally produced and ginned cotton.
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