23 November 2012

Kenya: Tea Traders Lobby Warn of Imminent Increase in Prices Over New Tax

TEA traders want a new tax imposed on local tea revoked adding that it will make Kenyan tea uncompetitive and reduce farmer's earnings immensely.

Under the umbrella body of East African Tea Traders Association, the traders have demanded for a review of the tea Ad Valorem levy of one per cent per kilogram of tea.

The new tax was gazetted in January replacing the previous taxation that was charged at Sh46 per kilo of made tea. Eatta said the new tax would result in a 700 per cent increase on tea price depending on the prevailing price at the auction.

"It will not only cut the profits but with all the bureacracy of handling the taxation documents it will also increase the time before the product is put out for sale," said EATTA chairman Peter Kimanga. "I will find it easier to buy Rwandan tea which has no hustles, I can buy in the morning and sell in the afternoon."

Eatta said that since the tax will make locally produced tea be uncompetitive at the Mombasa tea auction and would also affect quailty as farmers would produce lower quality tea to avoid paying higher taxes.

EATTA managing director Edward Mudibo said the one per cent tax should be cut to 0.25 per cent which he said would be in line with the recommendations of the tea task force.

Mudibo said that efforts to engage the relevant ministries have failed as there has been no feedback from numerous letters and emails to these ministries. "EATTA is totally against this levy which is punitive, excessive, regressive and needs immediate review," said Mudibo.

On his part, EATTA Kimanga said that a proposal of such magnitude should have been deliberated on with the stakeholders before implementation.

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