The Ministry of Agriculture says it will initiate talks with the Treasury with the view to having the 16 per cent value-added tax (VAT) levied on vegetable seed abolished to make Kenya’s produce competitive in the market amid cheap imports.
Agriculture and Livestock Principal Secretary Harry Kimtai said the tax has made it expensive for farmers to engage in profitable business, especially in the wake of cheap imports from countries such as Tanzania.
He said they have engaged the Seed Trade Association of Kenya (STAK) on how the issue can be addressed and have agreed to have a meeting that will give recommendations.
Mr Kimtai said the high cost of seed locally has seen some farmers source the commodity from neighbouring countries even as they are not sure whether they meet the required standards.
“The Ministry of Agriculture will advise the National Treasury to consider removal of vegetable seed because that has proved to make farming costly for farmers,” said Mr Kimtai.
This comes just days after STAK raised concerns that Kenya’s tomatoes, onions and other vegetables cannot compete favourably with the cheap imports from Tanzania.
“There are a lot of vegetables coming to Kenya from Tanzania and that is because our product is uncompetitive in the market owing to the 16 per cent duty levied on seed,” said STAK chairman Humphrey Kiruaye.
For instance, a kilo of tomato in Kenya is selling at Sh40 while the one procured from Tanzania will trade at Sh30.
Locally produced onions sell at Sh63 while those imported from the neighbouring state are going for Sh55.
The seed processors argued that Tanzania does not charge taxes on their seed, making their vegetables cheaper in the market.
Tanzania, under the East African Community protocol, is allowed to export goods to Kenya duty-free.
The call to abolish the 16 per cent duty on vegetables comes at a time when President William Ruto has given the Kenya Revenue Authority a target on tax collections.
The President announced that his administration expects to collect Sh3 trillion in taxes by next year and double that in the next five years.