Governors back bid to abolish tea levies

What you need to know:

  • Governors Mwangi wa Iria (Muranga), Peter Munya (Meru), Samuel Ndathi (Kirinyaga), Kinuthia Mbugua (Nakuru) and Cleophas Lagat (Nandi) said they had resolved to be enjoined in the case against Kenya Tea Development Agency as a faster way of resolving the issue.
  • Mr Munya said it is ironical that the government is working hard to subsidise fertiliser but slashes all the benefits farmers get “in the name of taxes”.
  • Prof Chepkwony argued that the agriculture produce cess is charged at a rate of one per cent of the gross value of the green tea leaf, while the ad valorem tax is calculated at one per cent of tea produce at the point of export.

Governors from tea growing regions have supported a court case by Kericho county boss Paul Chepkwony seeking to scrap tea levies.

The governors were speaking on the sidelines of the second devolution conference in Kisumu and said farmers had asked them why the crop has been singled out to attract more than 40 taxes and levies.

Governors Mwangi wa Iria (Muranga), Peter Munya (Meru), Samuel Ndathi (Kirinyaga), Kinuthia Mbugua (Nakuru) and Cleophas Lagat (Nandi) said they had resolved to be enjoined in the case against Kenya Tea Development Agency as a faster way of resolving the issue.

Mr Iria said: “How come only tea farmers are charged road levies whereas all other crops are transported using the same roads? We want the levies harmonised.”

He said they were exploring ways of ensuring counties take part in auctioning of tea, which is currently done by East African Tea Trade Association.

Mr Munya said it is ironical that the government is working hard to subsidise fertiliser but slashes all the benefits farmers get “in the name of taxes”.

Mr Ndathi said farmers largely depend on tea bonus, which has reduced by half in the past seven years. “The future is not bright as it may even get lower.”

Mr Ndathi accused the tea agency of using a “primitive” legal framework, which gives a farmers little room to participate in decisions.

Dr Lagat said they need a policy regarding tea to address issues of red tape and marketing.

“We are strongly persuaded that the tea directorate is not helping farmers. How can 10 of the levies charged come from the body charged with regulating the market to benefit players?” he posed.

Dr Lagat called for a refocus on new markets. “The traditional markets like Yemen and Egypt are in turmoil,” he said.

The governors said they had presented their grievances to the Senate Committee on Agriculture but preferred going to court because it is faster.

In the suit which will be mentioned on June 15 Prof Chepkwony wants the court to compel the tea agency to return Sh87 billion to tea farmers after it allegedly charged them twice for management services.

He promised to file another case seeking to have the authority compelled to pay farmers interest on the amount.

The suit further wants the court to declare unconstitutional the levying of agricultural produce cess and the ad valorem tax on tea farmers by the tea agency and the Agriculture, Food and Fisheries Authority.

Prof Chepkwony argued that the agriculture produce cess is charged at a rate of one per cent of the gross value of the green tea leaf, while the ad valorem tax is calculated at one per cent of tea produce at the point of export.

The governor also accuses the authority of secretly reaching agreements with tea brokers on the commissions to be paid out without involving the farmers, yet the commissions agreed upon end up being deducted from their pay.

He added that the tea agency has become inefficient and involved itself in corrupt practices since its privatisation in 2001.

“Kenya Tea Development Agency is now controlled by a small club of powerful elite businessmen who enjoy political patronage. It’s inefficiency has fostered corrupt and non-transparent practices culminating in a Bill to revert it to statutory control,” he said.

Mr Chepkwony said: “The Council of Governors has paid a senior counsel to represent us in the case.

“Following the case, payment of cess was abolished from December last year while they also expected that fertiliser prices will be subsidised and not used as a means of stealing from farmers.”