MPs criticise proposed tax on foodstuffs

By NJIRAINI MUCHIRA

Opposition to the Value Added Tax ( VAT) Bill 2012 is mounting with MPs and farmers now terming it as a recipe for economic upheavals, social unrests and food insecurity.

A section of MPs yesterday said the Bill has been forced on the government by the World Bank (WB) and the International Monetary Fund (IMF) and could lead to economic crisis and social unrest.

The VAT Bill 2012, which is up to debate in Parliament, among other things seeks to impose 16 per cent VAT on basic foodstuffs like maize, bread, milk, wheat among others.

It also seeks to introduce VAT on agricultural inputs like fertiliser, seeds, pesticides among others, a move that both the MPs and the Agro-chemical Association of Kenya say is a direct threat to food security.

“The Bill is being imposed on government by WB and IMF because the two institutions want the government to collect more taxes to service the national debt,” said Dujis MP Aden Duale.

“This bill is bad particularly for the majority poor.”

The Bill seeks to introduce VAT on several basic commodities and abolish VAT remissions on key sectors of the economy. On its part, the Kenya National Federation of Agricultural Producers (Kenfap) urged MPs not to pass the Bill, as it hurts agriculture.

“Tax on food products is dangerous to food security,” said Nduati Kariuki, Kenfap chairman.

VAT, an indirect tax that is collected on the value added proportion of goods and services, was introduced in 1989. The bill also seeks to scrap VAT remissions on schools, universities, hotels and low cost housing.

“The Bill should be withdrawn pending more consultations failure to which we will tell Kenyans to take to the streets,” said Yatta MP Charles Kilonzo.