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CS Henry Rotich promises to plug gap left by Sugar Levy

By Dalton Nyabundi | Sep 28th 2016 | 2 min read
By Dalton Nyabundi | September 28th 2016
Cabinet Secretary Finance and the Treasury Henry Rotich. PHOTO: FILE/STANDARD

NAIROBI: The Government will fill any gaps left after it scrapped the Sugar Development Levy in June, Treasury Cabinet Secretary Henry Rotich has said.

Rotich said the State was ready to meet stakeholders in the sugar sector and find alternative ways of plugging shortcomings that farmers feel they were exposed to following the removal of the tax.

He said the removal of SDL, charged at four per cent of the value of sugar, was a proposal from stakeholders and agriculture ministry, with the aim of raising revenue for farmers.

“It was clearly a stakeholders cry that farmers were not getting the full benefits of their labour,” Rotich said.

“They said the tax was eating into the farmers’ income along the whole sugarcane supply chain and so we wanted to ensure that more revenue trickles down to the farmer.”

He spoke in an interview with The Standard in Kisumu where he was meeting members of the Parliamentary Committee on Finance, Trade and Planning last week.

Troubled sugar sector

He said the move was also to unify the sector with tea and coffee which previously had such levies. He added, however, that if its removal left holes, they would seal them.

He, however, added that if the farmers’ concern was sugar research or development of infrastructure, the Government had set aside money in the National Research Fund and national and county governments.

Mixed reactions greeted the removal of the levy in this year’s budget. Whereas farmers contracted by public millers protested, saying the move would affect the smooth operations of the troubled sugar sector, the private manufacturers hailed it. The farmers urged the Government to provide funding alternatives to debt-ridden millers and cane development.

Kenya National Sugarcane Farmers Union Deputy Secretary Atiang’ Atyang’ said the sector has perennially suffered lack of political goodwill and the June budget speech by Rotich did not add value to it.

He said the proposal by Agriculture CS Willy Bett to reduce the VAT charged on sugarcane delivered to factories was not enough. Mr Atyang’ said State-owned millers, which need Sh59 billion bailout, stood to lose in the removal of the levy, which has for long been used to save millers from collapse.

Mr Atyang’, who also represents farmers in the Nyando Sugar Belt, said Miwani had collapsed, Muhoroni was in receivership and Chemelil, with a Sh3 billion debt, was headed for a downfall.

But the Kenya Association of Manufactures Western Kenya Chairperson Joyce Opondo said SDL hitherto charged at four per cent of the value of sugar was being misused and its removal would level the field for public and private millers.

“SDL was introduced to support the millers - both private and public. But it has been used to bailout public millers when in debt, which was never its purpose,” she said.

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