Cocktail of taxation on agricultural products retards economic recovery


Maize delivered to a National Cereal and Produce Board depot. FILE PHOTO | NMG

Roadblocks are synonymous with county headquarters in Kenya today.

As you enter and exit most counties, revenue officials have mounted barriers to collect taxes and cess on agricultural produce leaving and entering the county.

The Constitution provides for the provisions for taxation by both national and counties allowing a legion of taxes, levies and fees including market cess, entrance fees and stall fees.

Studies indicate that multiple and high agricultural cess rates are charged arbitrarily and with no justification for the rates applied, a practice that distorts the market, reduces producer incomes and threatens the sustainability of production and productivity of the value chains.

Transport costs, produce cess, market levies, brokers’ fees and informal levies constitute a larger proportion of the total distribution cost of agricultural products in Kenya.

Unlike transport costs, market levies and cess are open to abuse and evasion, which makes them expensive and unnecessary.

Several market players have raised concerns about multiple cess levies charged across counties along main trading routes.

The absurdity is that the same product is charged more than once as it is transported, which leads to high prices and makes the commodities uncompetitive.

A report by Kenya Markets Trust titled The Burden of Produce Cess and Other Market Charges in Kenya’ indicates that counties collect cess and simply treat it as one of the sources of revenue, which can be directed to any expenditure.

In most counties, traders do not get commensurate services to market levies charged such as water, electricity and security.

An analysis of the main trends in the supply chain of various farm produce across counties shows that there is a tendency along the value chain of adding price without adding value.

Traders also have to pay a fee to the county government to be allowed to sell, mostly ending up in tax collectors’ pockets.

Corruption thrives in these barriers since getting genuine receipts that can be traced back to the county revenue accounts is as a mirage as finding honest cess collectors.

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