Economy

Tea traders step up the fight against new laws

tea

Workers pick tea. FILE PHOTO | NMG

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Summary

  • The East African Tea Trade Association(EATTA) has moved to court seeking suspension of more sections of the newly enacted Tea Act arguing that they are discriminatory and unconstitutional.
  • The association, which manages the weekly tea auction in Mombasa says implementation of the law will distabilise production and export of tea in Kenya.
  • The High Court has already issued orders suspending sections which barred direct tea sales and the implementation of the tea levy, following a petition by 15 tea estates.

The East African Tea Trade Association(EATTA) has moved to court seeking suspension of more sections of the newly enacted Tea Act arguing that they are discriminatory and unconstitutional.

The association, which manages the weekly tea auction in Mombasa says implementation of the law will distabilise production and export of tea in Kenya.

The High Court has already issued orders suspending sections which barred direct tea sales and the implementation of the tea levy, following a petition by 15 tea estates.

In the EATTA petition, the association says tea sector accounts for 22 percent of the country’s foreign exchange earnings, yet has been subjected to more taxes.

Among the sections targeted by the EATTA is Section 34(4), which it said is silent on the percentage of payments to be borne by the tea buyers and factories to pay the brokerage commission. The section caps the brokerage fees but fails to indicate how the fees will be paid, EATTA argues.

The association wants the court to interpret and determine whether sections 5(l), 32(3)(b), 32(4), 34(3)(b), 34(4)(5)(6), 36(1),48 (1) and 53 of the Tea Act are constitutional.

The enactment of Section 53 of the Act on provision of tea levy, the association adds, shall be ultimately borne by the farmer or producer of tea.

“The provision is in utter contravention of the Constitution that provides for freedom from discrimination and equality before the law, which shows how the tea sector has been singled out and subjected to further taxes,” said lawyer Maureen Cheruiyot.

The association said it runs and conducts the weekly Mombasa Tea auction, from 10 countries. Its interests include tea producers, buyers (exporters), brokers, tea packers, and warehousemen and tea producers in Kenya, Uganda, Tanzania, Burundi, Rwanda, DRC, Ethiopia, Madagascar and Malawi.

On Monday, the High Court temporarily suspended the collection of tea levy and sections of the Tea Act, which forbids processors and manufacturers of tea, save for orthodox and specialty teas, from direct sales.

The law, which came into effect on January 11, states that all teas should be offered at the tea auction floor.

The tea estates under the Kenya Tea growers Association argue that sections 36, 48, and 53 of the Tea Act, were enacted in a manner that is not consistent to the Constitution.

The companies including James Finlay, Kapchorua Tea Plc ltd, Nandi Tea Estates, Williamson Tea Plc and Sotik Highlands Tea Estates Ltd, say the sections will impact their producers and the industry as a whole, if implemented.

KTGA argues that the said sections would have a negative effect on other tea players, particularly plantations, which have existing contracts for direct sales with overseas buyers.

The case will be heard on February 22.