MPs who voted for Finance Act crying foul after farmers' wrath

When a section of Azimio MPs walked out of Parliament Chambers as CS Treasury Njuguna Ndungu read the Budget Highlights for FY 23/24 on June 15, 2023. [Elvis Ogina, Standard]

A section of Kenya Kwanza MPs voted for the Finance Act 2023, but are now pleading ignorance of its consequences. Some have urged their constituents not to pay new taxes on horticultural produce.

And now the chickens have come home to roost as the MPs contend with the wrath of their angry voters, unhappy with the new taxes.

There is confusion and lack of knowledge about the electronic Tax Invoice Management System (e-TIMS), a requirement for farmers laid bare on Monday this week at a farmers’ forum in General Matenjagwo stadium in Kandara, Murang'a County.

At the forum, MPs joined avocado farmers in chasing away Kenya Revenue Authority (KRA) officers who were explaining the provision of the law. The MPs, Chege Njuguna (Kandara) and Edward Muriu (Gatanga) joined residents to condemn the officers who were forced to abandon the sensitisation.

When The Standard later engaged Mr Njuguna, on what angered the farmers, he said he had not been made aware of the provision in law. When probed further on whether he knew the law was anchored in the Finance Act, he said he was not aware.

“I will engage the legal teams to know where exactly the provision is anchored on. I only knew about the existence of the law two days before the meeting and that is how I joined the farmers to say no to the law,” he told The Standard on the phone.

The farmers claimed due to the new requirement, avocado buyers have relocated to Tanzania and Uganda leaving them with their mature product, saying the law was punitive and sought to destroy the sub-sector.

Mr Muriu told the agitated farmers said he would call KRA board chairman Anthony Mwaura, who hails from Kandara to inform him that farmers had rejected implementation of the new law. Treasury Cabinet Secretary Njguna Ndungu also comes from Kandara.  

When asked of his opinion on the law, Mukurwe-ini MP John Kaguchia promised to get back once he sought clarification.

Murang'a Senator Joe Nyutu claimed the new law would see KRA officers going to farmers’ farms to charge the levy, maintaining that their position was the levies be collected at aggregation centres.

“The law beats the principle of taxation where we should not spend more money to collect taxes but use the minimum to collect more taxes. It is like being told to pay more money for the insurance than buying the car,” Nyutu said.

He added: "The bills were rushed with the legislators not being given enough time to read and internalise the provisions word by word. We now realise there were so many issues in the law against our people."

Nyeri Senator Wahome Wamatinga called for restraint during the implementation of the laws noting that "in a bid to raise revenue, the government should not become an impediment to farmers."

“How do you tell an importer from London to acquire e-TIMS for him to buy coffee in Kenya? This will draw back the gains made in agriculture sub-sector reforms,” he said.

Nyeri Town MP Dancun Mathenge said the law was not clear on who should issue the e-TIMS between a coffee farmer, a broker and the National Coffee Exchange calling for more engagements with stakeholders.

“The e-TIMS is a challenging tool for ordinary people. For example, it is a requirement for people who buy coffee at NCE to be provided with e-TIM invoice if the purchase of coffee will be allowed as a deductible item in their account when they do tax returns.

"As the chairperson of the coffee caucus, we brought stakeholders together and agreed that KRA should come up with a solution on who among farmers, broker and NCE should be issued with the e-TIM receipt,” Mathenge said.

With the MPs reading different scripts on issues surrounding the registration of farmers to e-TIMS, Molo MP Kuria Kimani, the parliamentary committee chairperson of the Finance and National Planning committee, explained that it is farmers who will be issued with the e-TIMs invoice.

He said the Finance Act of 2023 provides for a legal framework to avoid leakages of revenues when claiming input VAT. "That is why we put the requirement that if you had to take any deductions when you are paying the taxes, those deducted must have been generated from the e-TIMS system," he said.

He added: “The avenue is just providing a sort of a receipting system. In its absence we have had brokers register on e-TIMS, buy the produce from farmers at whatever the price, and go and sell them to the processors. This is what we are trying to avoid and allow farmers to trade directly to the buying company."

He downplayed claims of illiterate farmers who may not have the invoices saying the requirement was a simple system that needed no smartphones adding that one can even use the Mpesa app.

He said farmers earning Sh24,000 a month, the minimum threshold for the pay-as-you-earn (Paye) need to declare their income while those who had a gross income of Sh1 million annually would have to pay 3 per cent Turn Over Tax (TOT).

“Even if you are worried that KRA will find there are taxes you have not been paying then you would rather file now so that you know what it is because a few years later, you will file for a tax compliance certificate and you will be told that you owe KRA some amount of money,” Kuria said.

He called out the MPs inciting the electorate on the issue saying; "It is important that we read and understand the laws that we pass and to interpret our them correctly. As I said the 5 per cent on farmer’s produce was rejected by the National Assembly and there are no such laws. They are rejecting something that does not exist,” he added.

Kiambu Woman Rep Gathoni Wamuchomba hit out at MPs accusing them of being conveyor belts of laws they did not understand urging them to go back to Parliament to repeal the Finance Act as opposed to inciting the public over the matter.

“Laws are made to be followed and the law on registration of farmers to E-TIMS must be implemented. The only way out is for the MPs to repeal the laws,” she said.