Tanzania: What’s up with Wig Tax?


By Neo Sithole

Last week Tanzania’s ministry of finance presented its proposed 2019-2020 budget. Philipo Mpango, who was tabling the budget in parliament was applauded by legislators when he made the proposals that are likely to be unpopular with ordinary Tanzanians. 

One such proposal was a new tax on wigs and hair extensions manufactured locally and imported. Mpango announced that the proposed budget which is expected to come into effect next month will tax locally manufactured wigs/ hair extensions 10% and imported ones 25%. The cheapest wigs can cost around R60 ($4 US) but can go for R1890 ($130 US). 

Another tax increase is a staggering leap from 25% to 35% on chocolates and biscuits. Gaming taxes have also been increased.

While many praises the decision by the finance ministry to tax wigs and hair it has garnered understandable negativity in Tanzanian society. Supporters of the proposed levy make the argument that it will help women keep their hair natural with Tanzania being a society that tends to uphold the traditional value. However, society is changing and more wear wings and hair extensions. Wig retailers and importers have condemned the move by the finance ministry stating that people love artificial hair. The increase in tax would make it harder for people to easily afford them, possibly reducing the intended increase in funds generated from wigs. 

For these women, the proposed levy is a means of punishing them for wanting to look good.  

The rationale behind the wig tax is an attempt to increase revenue generated by the taxes to wean itself from debt. Tanzania’s international debt has increased External Debt in Tanzania increased to 21529.60 USD Million in March from 21433.10 USD Million in February of 2019. External Debt in Tanzania averaged 14749.80 USD Million from 2011 until 2019, reaching an all-time high of 21529.60 USD Million in March of 2019 and a record low of 2469.70 USD Million in December of 2011.



Mpango also announced the scrapping of tax on imported coolers and other equipment that farmers use to store vegetables. A proposed amendment of Income Tax Act to reduce corporate tax to 20% from 30% for new investors in pharmaceutical and leather industries is another way to invite investors into the country. The exemption of the value-added tax on sanitary pads introduced in 2018 will also be scrapped because the refusal of businesses on reducing the prices meant consumers did not benefit. 

 -JP

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Tanzania

Hair Industry

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