Cooking oil companies in court to stop new taxes on raw materials

A local purchases cooking oil at Mama Watoto Supermarket in Kakamega town. [Mumo Munuve, Standard]

Kenyans will have to dig deeper into their pockets to buy cooking oil and soap if new levies on raw materials introduced last month take effect.

Oil manufacturers in their case filed before the High Court argue they will be forced to pass the new cost to consumers.

They say that although the Kenya Association of Manufacturers (KAM) has been engaging the government to rectify the National Crops and Nuts Regulations, 2020, their plea has been ignored.

The manufacturers that have sued the State include Bidco Africa, Pwani Oil, Golden Africa Kenya, Kapa Oils Refineries, United Millers, Darfords Industries, Giloil Company, Salwa Kenya, Mvita Oils and MORL.

According to court papers, the 2020 law came into force last month and imposes between 10 per cent and 25 per cent levy on coconuts, cashew nuts, macadamia nuts, groundnuts, castor beans and sunflower.

The firms argue that the introduction of new levies will hamper their businesses if the court does not lift them.

They have sued the National Assembly, Agriculture and Livestock Cabinet Secretary Peter Munya, Agriculture and Food Authority, and Attorney General Kihara Kariuki.

They say the regulations introduce an additional two per cent levy per consignment that lands in the country and this amounts to double taxation and is illegal.

"The petitioners have come to this court under urgency following the decision of the first and second respondents to gazette and enforce the unconstitutional, unlawful and unreasonable Legal Notice No. 164 of 2020, being The Crops (Nuts and Oil Crops) Regulations, 2020,” the court papers read.

Manufacturers say the regulations threaten their survival and that of employees who rely on them to eke out a living. Oil manufacturers also claim they will pay for a manufacturer's licence at between Sh5,000 and 25,000, and inspection fees of between Sh1,000 and 10,000.

Kenya is a net importer of raw and intermediate materials used in edible oils. Data from the 2020 Economic Survey indicates that Kenya produced 223,000 tonnes of vegetable oil against domestic demand of 815,000 tonnes in 2019.  

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