Farmers and other key stakeholders in the agriculture sector are demanding abolition of the amendments made to the VAT Bill that seeks to tax farming inputs and food items. Through Kenya Private Sector Alliance (KEPSA), the farmers are fretful of the implications of the Bill that intends to impose a standard rated VAT of 16% on the currently zero-rates agricultural inputs and food items.
Addressing journalists at KEPSA offices in Nairobi, Livestock Producers Association chief executive Mr. Patrick Kimani said: “We are issuing a notice to the government and specifically to the Agricultural Parliamentary Committee to act swiftly and look at the implications of this Bill to the nation.”
He added that they have been lobbying for the amendment of the proposed levying of VAT on agricultural inputs since last year with no success. According to a statement from the stakeholders, the inclusion of VAT will translate to higher prices of agricultural produce and food items, trickling down to the low income earners, whose livelihood is largely dependent on agriculture.
Taxing of fertilizers among other farm inputs will not only stifle economic growth but also breed fertile ground for illegal importation and smuggling of inputs. The stakeholders also argue that the Bill is incongruent with Vision 2030 prospectus and failure to amend the Bill is ill-fated.
The Agricultural Sector Development Strategy (ASDS) formulated by the government and other stakeholders to help achieve economic development as stipulated in vision 2030 seeks to create a “food secure and prosperous nation” which will be negatively compromised if the proposed amendments are passed.
“Uncertainty with the tax exemption and failure to amend this Bill will have the investors live at the mercy of the Minister for Agriculture,” said Gerald Masila representative of the East Africa Grain Council at the press briefing.
Coming at a time when the sector is reeling under the effects of twin challenges of high input prices which have lowered production, and high output prices manifest in food insecurity, poverty and lack of employment, the proposed bill will serve to further shoo potential investors with the uncertainty.
Kenya’s economy is heavily reliant on agricultural exports that form a large percentage of foreign revenue. The levying of VAT threatens the economic stability of the nation, risks further weakening of the Kenyan shilling and inflation, according to the statement.
Agriculture supports 75% of employment in the country and the government should support agriculture knowing it is a major pillar for the economy and a key input in the 10% growth anticipated per annum in the vision 2030.
