Review burden of tax in tea sector

Tea farmers have been uneasy in the past one year due to low returns from the crop. Rising costs, crisis in Kenya’s key markets in the Middle East, such as Egypt, Iraq and Syria, and embargoed trade with Iran and Sudan have been mentioned as possible causes of the thinning market.

This has now left the country holding more tea baskets than it can dispose, with the effects being felt in every part of the production chain. There has been a steady increase in tea production globally, with supply outpacing consumption, leading to the current slump in prices and a sharp drop in earnings by farmers.

It is heartening that all stakeholders in the industry are looking for ways to ensure that the livelihoods of thousands of small-scale farmers who rely on tea are secured.

While stakeholders are in agreement about the urgent need to diversify markets and products, especially by venturing into orthodox tea, and other speciality tea products, there is consensus on the fact that the sector is overtaxed. Tea farmers are burdened with dozens of taxes and levies – more than 40 of them - which unnecessarily increase the cost of production and makes Kenya’s tea exports uncompetitive in the international market.

In an era of increased global competition for cash crops, Kenya cannot continue shooting herself in the foot by policies that appear designed to cripple a sector that had been a key pillar of the country’s economy. That the Government appears responsive to stakeholders’ view that the tax regime in the tea industry needs a review is a move in the right direction.