Premium

Farmers, MPs up in arms over tax proposal on farm produce

A maize farm along Eldoret -Langas Estate in Eldoret Uasin Gishu County. [Peter Ochieng, Standard]

A proposal by Treasury Cabinet Secretary Njuguna Ndung'u to tax Sh5 for every Sh100 worth farm produce has been greeted with resistance from the stakeholders in the agricultural sector.

While justifying the establishment of the proposals, Ndung'u claims the agricultural sector is under taxed.

"The Kenyan economy remains highly dependent on the agriculture sector, which contributed an average of 21.2 per cent of the GDP in 2022 and has the highest employment multiplier in the economy. "Despite this, the sector's contribution to tax revenue is less than 3 per cent indicating that the sector is under taxed,” the National Treasury said.

Players in the agricultural sector led by their MPs drawn from the government and the opposition have opposed the proposals which they are now plotting to shoot in National Assembly and in the Senate.

According to Juja MP George Koimburi, the proposals are counterproductive and oppressive to farmers and the only remedy is opposing them when they are presented at the National Assembly.

“The electorate of Mt Kenya region will suffer the most because we are depending on Agriculture for survival, from coffee, tea, maize, macadamia and dairy farming, the taxes pose a great danger to our people and the National Treasury should be aware that we shall use our minds to block them,” he said.

The MP told The Sunday Standard that the establishment of the 5 per cent withholding tax was akin to adding insult to injury to Kenyans who are already grappling with the high cost of living.

“Right now, we are not even able to face our electorate because things are bad on their end and that is why we shall not entertain any more burden to our people,” he added.

Nandi Senator Samson Cherargei, who hails from Rift Valley, the maize bastion region said the ministry could have been informed by a wrong misconception that the agriculture sector was not paying taxes saying the notion was untrue.

“Farmers pay tax through purchase of chemicals, farm inputs and machinery among others and Treasury runs a risk of introducing double taxes to our farmers,” he noted.

The Senator further said it was inconsequential to introduce the withholding tax to farmers who are making losses saying the move will discourage more farmers and drive them out of farming, a move he said will plunge the country to food insecurity.

“The move will hinder food production as well as interfere with food security in the country, the government should be coming up with tax incentives especially to the youth to lure them into farming in bid to curb the high cost of living,” he opined.

National Assembly Minority leader Opiyo Wandayi criticised the move and called on his fellow legislators to unite outside their political affiliations and oppose the "introduction of the unpopular tax to the already suffering Kenyans."

 “We should rise up against our party and political affiliations and use our parliamentary power to stop the Executive from overburdening our people with taxes,” he stated saying if the MPs would act on the side of Kenyans, the move would remove the notion of abandonment of the electorate.

Farmers too have expressed their discontent, maintaining that they received meager support from the government in the production process and it would not be advisable to tax them.

A farmer Peter Kariuki Kihara who has five acres of coffee bushes said the coffee prices were too low and that any further deduction would bring to naught efforts to streamline the coffee sub-sector by the government.

“They should have at least revived the coffee sector before taxing us since the move will only worsen the situation. For now, we suffer deductions right from management costs and other deductions and the move will push most of us out of farming,” he said.

Business
Manufacturers propose zero taxation on raw materials in Finance Bill
Business
State House exceeds budget by Sh1 billion
Enterprise
Premium Why academia might have failed businesses
Business
Premium Manufacturers warn Finance Bill proposals will raise costs, kill jobs