Enhancing policy dialogue and collaboration among donors,

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Enhancing policy dialogue and collaboration among
donors, public and private sectors
Taxes and Tariffs on Insecticide Treated Mosquito
Nets
Martin Alilio, Halima Mwenesi, Ominde Achola,
Chris Muhango, Will Shaw, and David
McGuire NetMark/ECSA-HC/REDSO
October 2004
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Taxes and Tariffs on Malaria Interventions

• Making ITNs affordable to most households is a
  condition for achieving their large scale use
• Retail price of ITNs is a major barrier to their
  use
• Taxes and Tariffs constitute between 40- 50 of
  the price of ITN materials in some countries in
  Africa
• The price of ITN materials can be reduced
  significantly if governments remove taxes and
  tariffs on the finished ITN products or raw
  materials
• Countries with high taxes and tariffs have
  limited commercial activities and use of ITNs
• Government intervention is desirable and does
  not impact the ITN market negatively

October 2004
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An ITN Cost Structure
Production Costs
Taxes, tariffs and distribution costs (2-75)
Distributors and Retail Costs
Manufacturing Insurance and Freight
Tariffs
VAT
CIF
Range 2 in Mozambique to 75 in Nigeria
October 2004
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An ITN Cost Structure

• The total cost to a household of utilizing an ITN

October, 2004
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Taxes and tariffs cause higher prices of ITNs
An example of Ethiopia

• Status of tariffs and taxes In place If
  Eliminated
• Cost of production/shipping 3.00 3.00
• Excise duty, etc. (25) 0.75 0.00
• Profits (a) (30) 0.90 0.90
• VAT (20) 0.93 0.00
• Consumers price 5.58 3.90
• ( price reduction if TT Eliminated) 1.68)

October 2004
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Many governments have taken important steps to
address the issue of Taxes and Tariffs

• In Abuja, 43 countries agreed to remove taxes and
  tariffs
• 18 countries in Africa have removed taxes and
  tariffs on nets, insecticides, and fabrics for
  netting

October 2004
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Annual ITN sales - Uganda
Taxes and tariffs waived
October 2004
Source Kilian, 2004
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Taxes and Tariffs Suppress Commercial Bednet
MarketsCountries with High Taxes and Tariffs
have Low Bednet Coverage
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ITN TT Advocacy Model Basic approach
consequences

• Consequences of malaria are expressed as
• number of deaths
• number of person-days of illness
• number of persons with permanent disability
• economic productivity loss resulting from
• deaths and disabilities
• cost of preventive and curative treatment

October, 2004
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Elimination of tariffs and taxes on ITNs will
contribute to

• Lives saved
• Disabilities reduced
• Absenteeism from school and work reduced
• Productivity gains and increased income-
  generating ability

Photo NetMark
October 2004
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Urgent action

• Review tax and tariffs status and regulations

• Ensure implementation of policies in countries
  that have officially removed Taxes and Tariffs

• Monitor pricing of ITNs to ensure benefits are
  passed on to consumers

• Strike a balance between subsidies and
  sustainable, commercially viable approaches

October 2004