Farmers protest five percent tax on farm produce

Farmers in Trans Nzoia county have expressed concern over plans by the government to introduce five percent withholding tax on agricultural produce.

Fredrick Rono, a farmer from Kiminini constituency termed the proposed tax  “exploitative” and a setback to progress made towards attaining food security.

Rono urged the government to consider reducing the withholding tax to 1 per cent instead of the proposed 5 per cent. 

Highlighting his recent experience in Kapchorwa, Uganda, he pointed out that leasing an acre of land costs only Sh5,000, a fraction of the cost in Kenya.

Rono said this could force investors to leave Kenya for Uganda, a move could impact the  agricultural sector negatively.

“This proposal is a slap in the face of farmers. There has been no subsidy on seeds, ploughing costs have skyrocketed and producing a bag of maize already costs around Sh3,500. Yet, the government wants to buy it at Sh4,000 and take five percent? It's simply not right,” he said.

The farmer lamented that the proposed tax, coupled with the 16 per cent increase in VAT on fuel will push the cumulative tax burden on farmers to a staggering 21 per cent.

“It is ironic for the government to reduce fertilizer prices but hike fuel prices and propose this new tax. It's like taking one step forward and two steps backward,” said Rono.

He said other costs including transportation, drying and storage of maize at the National Cereals and Produce Board (NCPB) will further cripple farmers.

“We (farmers) are not asking for handouts,” he said. “We just want a fair playing field. Don't discourage us from feeding the country by imposing punitive taxes,” said Rono.

His sentiments were echoed by Joseph Lamai, a farmer in Kwanza who suggested a moderate three percent tax.

Lamai fears the five percent tax could cripple the agricultural sector and drive farmers to Uganda where production costs are significantly lower. 

This exodus, he warns, will deprive Kenya of vital job opportunities, food security and much-needed revenue.

“We're already paying three percent to NCPB, adding five percent is simply too much. Farmers will look for greener pastures elsewhere if this is implemented,” Lamai said.

The proposed tax is part of a wider strategy by President William Ruto's administration to boost revenue generation by tapping into the agricultural sector, which according to Treasury Cabinet Secretary Prof Njuguna Ndung'u is "undertaxed.”

“The Government will introduce a withholding tax on agricultural produce which will be a final tax at a rate not more than 5 per cent of the value of the produce delivered to the cooperatives or other organised groups,” the Treasury said.

Financial Standard
Aviation industry struggles to kee up despite aircraft parts tax cuts
Financial Standard
Kippra: Diversify external funding to tame Kenya's spiraling debt
Opinion
Navigating AI revolution to advance Africa's labour landscape
Business
No reprieve for bank in Sh33 billion case with Manchester Outfitters