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New tax plan to hurt farmers

By Mbatau wa Ngai | June 2nd 2020

Finance Cabinet Secretary Ukur Yatani appears to have quickly learned the art of giving subsidies with the left hand and taking them away with the right hand as he crafts the upcoming budget in the wake of the coronavirus epidemic.

The CS’s proposal to increase the cost of fuel and cooking gas undercuts his reduction of Value Added Tax (VAT) rates.

But it is his proposal to impose VAT on fertilisers, agricultural pesticides and tractors that paints a picture of someone who is oblivious to the plight of small-scale farmers and the rural poor whose numbers have been growing exponentially.

The precipitous decline of the national economy is expected to result in an even sharper drop in the living standards of this segment of the population even before the government adds to its woes by imposing new taxes. Paradoxically, this forms the bulk of the country’s population that lives below the poverty line and has little income left to invest in their usually smallholdings.

Value for money

Indeed, these farmers usually recycle their seeds, which they plant with little or no fertiliser, resulting in ever-reducing yields.

Analysts have long argued that the only way to break the cycle of low yields and poverty in the rural areas is for the government to subsidise farming inputs such as quality seeds, fertilisers and pesticides.

This explains why these analysts find it unconscionable for the Finance CS to even consider the cost of these inputs at a time when he is busy attempting to keep the country’s economy from falling even further.

Regrettably, agriculture, despite being widely acknowledged as the backbone of the Kenyan economy, is unlikely to get any of the money it needs to undertake the restructuring it requires to ensure the country and its citizens get value for money.

The distribution of the few subsidised inputs available, for example, needs to be completely restructured to ensure that only the most deserving farmers get them.

Such an exercise would seek to eliminate incidents where the rich large-scale farmers get subsidised inputs such as fertilisers at the expense of their poorer counterparts.

The exercise would also seek to stamp out the myriad brokers who connive with ministry officials to get hold of the fertilizers which they repackage and sell at exorbitant prices. The government may also need to open soil testing centres in all the counties to determine the type and quantity of fertilisers required by the different kinds of soils found in each region.

The number of agricultural extension officials would also need to be increased to cover each region.

[Mbatau wa Ngai, [email protected]]    

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