Tea farmers demand cash, tax incentives

Jane Wambui plucks her tea leaves at Wamagana Village in Tetu,Nyeri County on January 13 2016. She said the new plans introduced by the goverment to withdraw Sh321 per bag as subsidy would cost her Sh4170 extra since she had already been requested KTDA to supply her with 13 bags of fertilisers to boost her tea production in 2015/2016. PHOTO/KIBATA KIHU/STANDARD.

Small-scale tea farmers have asked the Government to make good on overdue cash incentives meant to grow sales for the country’s second-highest foreign exchange earner.

This comes following reports that the Government is looking to conduct a review of existing taxes and levies governing the production and sale of the key cash crop.

Tea farmers in Rift Valley are however, demanding that the Government deliver on promises made two years ago to review the tax policy and harmonise it with the existing business environment in competitor tea-exporting countries.

“In 2014, we had a meeting with the Government where we established that there are 42 taxes in total required in the tea production value chain,” explained Mr Joseph Chepkwony, a tea farmer in Bureti and official of a regional farmers' lobby group.

“The ministry assured us that a review on some of those taxes would be done in the next two months but since then nothing has been done,” he stated.

Part of the levies in contention include a 12 per cent value added tax paid for tea processed and sold within the country and an additional 1 per cent ad voleram levy slapped on goods traded at the Mombasa auction.

“Other countries that sell their tea at the Mombasa auction are not required to pay the ad voleram levy hence their produce can be priced less than ours even if our quality is better,” stated Mr Chepkwony.

If effected, the waiver of a 16 per cent VAT on Kenyan tea has the potential of making the product at least 16 per cent cheaper, at the same time increasing earnings for small-scale tea farmers.

The farmers have further called on the Government to establish an equalisation fund to cushion small-holder farmers during price fluctuations caused by unpredictable weather.