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Consumers to feel more VAT pain

Steve Umidha @steveumidha

Stakeholders in the agricultural sector yesterday decried the introduction of 16 per cent Value Added Tax (VAT) on pest control products warning it would increase the cost of food.

Yesterday, the Agrochemical Association of Kenya, Eastern Africa Farmers Association, among other agricultural institutions called for a repeal of the levy saying it will significantly contribute to an automatic increase in the cost of production for farmers who will ultimately pass it to consumers.

“This additional cost compounds the many challenges that Kenyan farmers are currently facing. In the last three seasons, farmers have faced severe drought, fall army worm invasion, prolonged floods and influx of cheap food imports that depressed commodity  prices.

All these have rendered the Kenyan farmer uncompetitive,” said Stephen Muchiri, Eastern Africa Farmers Federation chief executive.

If the government fails to suspend the levy, the stakeholders said VAT on pest control products, coupled with the expected increase in fuel from September 1, the new tax regime will lead to an increase of more than 50 per cent rise in the cost of production for farmers; increased food prices; dependency on food imports; loss on income for small-scale growers.

Additionally, the war against contraband goods may face some setback as farmers will be targets of cheap counterfeit pesticides. According to the stakeholders, the health of most Kenyans will also be at risk due to exposure of substandard pest control chemicals.

“Gains achieved in the agricultural sector are going to be eroded by this move to further tax the Kenyan farmer. We are talking with  authorities  Treasury, Parliament, Agriculture ministry and other stakeholders involved to push for suspension of the levy,” said AAK chief executive Evelyn Lusenaka.

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