27 August 2012

Tanzania: Bottled Water Is Not Luxury - Representative

FOR Siwema Makuwa, a mother of three, bottled water is a necessity because tap clean and safe water is not available in her area located at Ubungo constituency in Dar es Salaam.

"I usually use bottled water for drinking while salty water from wells is used for cooking, cleaning and bathing and other domestic activities. Because of the size of my family we buy a five-litre container of water once a week currently because it's a dry cool season but two of them during the hot season," Ms Makuwa said.

On average five litres of bottled water sells at between 1,700/- and 1,800/- in the commercial capital, Dar es Salaam of which 345/- is excise duty. In a month during the hot season, Makuwa's family allocates between 6,800/- and 13,600/- per month for clean and safe drinking water which is a big burden to a family whose bread winner works as a government messenger earning 150,000/- per month.

In his 2012/13 budget, Finance Minister Dr William Mgimwa wanted to raise excise duty on bottled water from 69/- to 83/- a litre, lawmakers were unhappy and stood their ground in opposition."During our discussions with the Minister, the committee observed that the increase is too much, roughly 20 per cent.

Bearing in mind that this product is not a luxury and that government policy pledges to provide people with clean and safe water, the increase is unjustifiable," said Dunstan Kitandula, Vice-Chairman of Parliamentary Finance and Economic Affairs Committee while debating the 2012/13 Finance Bill.

Mr Kitandula who presented the official committee report relating to the Finance Bill, argued that bottled water manufacturers are simply helping out the government deliver on its pledged policies to the public hence need to be backed.

"The committee proposes that excise duty on bottled water should remain 69/- per litre during this fiscal year," the ruling party Mkinga lawmaker said. National Water Policy of 2002 states that despite significant investment in the water supply services since the early 1970s, water supply coverage is not satisfactory.

The 1991 National Water Policy set a goal of providing clean and safe water to the population within 400 metres from their households by the year 2002. "Today only about 50 per cent of the rural population has access to a reliable water supply service. Due to poor operational and maintenance arrangements, over 30 per cent of the rural water schemes are not functioning properly.

The coverage for urban areas is 73 per cent but most urban water supplies are inadequately treated due to malfunctioning treatment plants," the policy states in part.Several lawmakers rallied behind the committee's position with Deputy Shadow Finance Minister, Christina Lissu describing Treasury's proposal as lethal as low income bracket families will not able to access the necessity which is part of food.

"It should be noted here that water is part of food and regular increase of excise duty charged on bottled water spurs food inflation which frustrates efforts to reign in rising inflation," Ms Lissu said.Warning against growing tendency by Treasury to consider bottled water as a luxury, the opposition Chadema Special Seats lawmaker, argued that increasing excise duty on the necessity burdens the common man and exposes millions of people to waterborne and other disease as people are likely to resort to drinking unsafe water.

With a population of over four million people, Dar es Salaam like many cities in the country, is struggling with shortage of water as rapid population growth has not been at par with investment to increase capacity. Tabling his ministry's 2012/13 budget estimates last month, Water Minister, Professor Jumanne Maghembe told parliament that a mega project to find a lasting solution to the commercial capital's water supply and sanitation problems is under way.

The 36 million US dollars (approx. 56.4bn/-) Lower Ruvu water project involves laying new water pipes from the Lower Ruvu water plant to supply Dar es Salaam and coastal regions, as part of plans to expand the plant's processing capacity from 180 million litres to 270 million litres of water per day. The city's water demand is estimated at 260 million litres a day.

The project which is being jointly funded by the government and the US government through Millennium Challenge Corporation will be completed in the next 15 months. "I hope that the problem of clean water supply for the city will be over by 2014," the minister assured parliament ahead of Dr Mgimwa's Finance Bill during the last two days of the marathon budget session.

Implementation of the Lower Ruvu expansion project has reached 36 per cent with an allocation of 116.4 bn/- in 2012/13 financial year. While this project is going on, people like Ms Makuwa and millions of other Tanzanians will continue relying on bottled water from private companies which are complementing government efforts to meet its obligation of supplying clean and safe water to the public.

"I have heard the numerous arguments made by members of parliament relating to an intended increase in excise duty paid on bottled water and agree with the popular opinion," said Dr Mgimwa whose maiden Finance Bill was hotly contested by MPs who questioned a number of tax increments especially targeting necessities.

Most MPs want excise duty waived on bottled water until such time when taps run clean and safe water in the whole country. "This tendency targeting tax increases on bottled water annually is unacceptable," said Kitandula.Since 2010 when the government introduced excise duty on bottled water, the rate has been increasing annually from 12/- per litre that year to 69/- per litre last year and a hiked 83/- per litre this year.

Confederation of Tanzania Industries (CTI) has already voiced concern against hiked excise duty imposed on bottled water despite the fact that the burden squarely falls on the shoulders of low income earners.

CTI which formed a taskforce to lobby for a reduction of the rate from the current 69/- to 12/- per litre, argues that statistics show that an increase in the duty has affected demand.

CTI chairman Felix Mosha said, "Bottled water manufacturers have told us that their sales have decreased because some consumers cannot afford the new prices of the commodity," Mr Mosha said.Due to logistic challenges, the price of bottled water in the upcountry areas might have raised more than 50 per cent in urban areas.

Mr Mosha argued that keeping a high excise duty on bottled water does not mean the government will increase the revenue collection, instead the tax sometimes end up making the service more expensive.

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