Hides and skins traders fight new levy on exports

Exporters have gone to court to challenge a government decision to levy duty on skins and hides, saying it is based on a bad law.

The Tanners Association is challenging a directive by the Ministry of Agriculture, Livestock and Fisheries to the commissioner of customs to ensure that  traders pay duty currently at 100 per cent.

The duty levied on hides and skins, wet blue leather, crust leather, and finished leather products is meant to protect the local industry by ensuring supply of raw materials. The association, however, says this amounts to denying them a right to own property.

Through lawyer Mwang’ombe Mwakio, the traders say the levy is unlawful because a sections of  the Hide, Skin and Leather Trade Act  has been deleted.

The Hide, Skin and Leather Trade (Amendment) Rules 1995 were established by legal notice No. 200 of 1995 on March 29, 1995 and imposed a 2 per cent cess on both processed and unprocessed goods.

The Finance Act 2012 amended the law and increased rates on hides and skins export duty by 100 per cent.

The association claims that the 21 August directive denies them the right to own property, considering that the order comes after they sued the state on the same issue on 1 October, 2013. The suit is yet to be determined.

The association had sent a complaint to the ministry on 18 July, 2013. The ministry  responded on 2 September, 2013, threatening to deregister defaulters.

COMPILING DEFAULTER'S LIST

“We are in the process of compiling and computing the defaulters’ list and the amount they owe the department in order to submit it to the Cabinet secretaries, ministries of Agriculture, Livestock and Fisheries, Industrialisation, and Finance in order to recover the money. Secondly, it is to seek concurrence on whether to deregister them since they are flouting the Act,” said the ministry.

The director of veterinary services claims the money collected goes to the Veterinary Services Fund.  However, there are reports the kitty does not authorise collection of any levy from these products in this manner.

“The ministry has threatened tanners’ rights, they will suffer irreparable loss,” said Mr Mwakio.

The association’s chairman, Mr Robert Njoka Muthara, says the levy not only violates tanners’ social and economic rights but also contradicts Article 10 of the Constitution, which says that a public policy should be implemented to ensure sustainable development.

High Court judge Isaac Lenaola temporarily stopped the ministry from levying, prosecuting, and deregistering tanners.

“I hereby issue an injunction restraining the ministry and the AG by themselves, their agents, or any other person whatsoever from levying cess, prosecuting, deregistering or interfering with the businesses of members of the Association in any way pending the hearing and determination of  this case,” said Mr Justice Lenaola.

The case will be heard on November 4.