13 June 2018

Kenya: Tea Traders Want Govt to Scrap Multiple Taxes On Produce

Players in the tea sector want the government to remove 38 levies and fees they are subjected to in order to improve the trade.Speaking during a meeting with Agriculture Cabinet Secretary Mwangi Kiunjuri at the East African Tea Trade Association, the players led by Ketepa managing director Albert Otochi decried multiple levies they pay.In January, Mombasa county government reintroduced a cess of Sh32 per packet of tea cess.

The cess was introduced for the first time in 2014 but was later suspended in 2015 following a successful court case against it.

However, the court later ruled in favour of the county, allowing Mombasa to collect cess on trucks carrying the commodity and other goods destined for export.The county sent a circular to tea stakeholders informing them of the levy on every package transiting through Mombasa.Some three weeks later, a regional tea traders' association and Mombasa county government struck a deal scrapping the levy imposed by the devolved unit for each package entering the port city.

The East African Tea Traders Association (Eatta) and Mombasa County's trade department reached an agreement that saw trucks ferrying tea meant for export exempted from paying cess.

'Zero taxes'

"Consolidate the multiple levies and taxes that are a bottleneck to efficient transaction of business. Rationalise some of the 38 individual levies, taxes, licensing fees among others.

"Some of the neighbouring countries have zero taxes, if we were to do that it will boost trade," EATTA Trade Development Manager Brian Ngwiri said.

The players including tea exporters, brokers, packers and warehouses urged the CS to rationalise the statutory and the regulatory requirements.

They also decried counterfeit tea within the Kenyan market that has negatively affected their business. "We are facing a number of challenges especially in double taxation. We should embrace zero tax on tea to help in tea trade. Today, Kenyan businesses face higher tariffs when they export within Africa than when they export outside.

"Consolidating Africa into one market provides great opportunities for enterprise, business and consumers it is estimated to generate a 52.3 per cent boost to intra-African trade," Mr Ngwiri said.

Highly fragmented

Mr Ngwiri said the main challenge is that the African market remains highly fragmented. "A range of non-tariff and regulatory barriers still raise transaction costs as well as logistic of accessing the product into the market," he added.The total global production in the year 2017 was 5.6 billion kgs while the consumption was 5.2 billion kgs.

Of the total production, Africa produced 679 million kgs.

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