Tea farmers will lose hundreds of millions of shillings if the Mombasa governor does not rescind his decision to tax tea exports passing through his county.
The governor Ali Hassan Joho wants tea farmers to pay his county Sh32 for every package of tea they export via Mombasa in a move that shows how local politics affect agriculture in Kenya.
The move, contained in a circular issued by the county government of Mombasa, has irked governors from tea growing areas who have protested.
“We believe that this cess should not be levied at the port as it will lead to double taxation across various counties to the detriment of the tea value chain,” said Paul Chepkwony, the Kericho governor.
The East African Tea Traders Association (Eatta) has been negotiating with the county’s trade department which promised to abolish the cess. Last week, during the release of the 2017 Tea Performance Report, Edward Mudibo, the East Africa Tea Trade Association managing director, said the matter had been resolved.
“We had a discussion with the Trade executive and they agreed that as long as we give the list of the lorries transporting tea they will not be charged,” Mudibo said – though it seems that it hasn’t.
“You cannot charge goods in transit. Most of the our tea is destined for export and therefore on transit.”
It is believed that the new trade barrier would affect tea sales abroad and lower income for farmers.
Last month, the county sent a circular to tea stakeholders informing them of a Sh32 levy on every package of tea that transits through Mombasa.
“The introduction of tea cess in the Mombasa tea auction centre at the rate of Sh32 per pack is unlawful,” said Chepkwony.
“Cess can only be from the point of production. If you do not produce the goods, you have no right to tax them,” he said, adding that if all counties were to tax all the goods on transit, it would be a big burden to Kenyans
The Tea Directorate had also condemned the move, saying it was not in the best interest of Kenyan tea at the international market.
Among the tea growing areas in Kenya are Kericho, Bomet, Nandi, Kiambu, Thika, Maragua, Murang’a, Sotik, Kisii, Nyamira, Nyambene, Meru, Nyeri, Kirinyaga, Embu, Kakamega, Nakuru and Trans-Nzoia which are dominated by the Jubilee party.
The Jubilee governors think the move is supposed to irritate their supporters who eke a living growing tea.
The cess was first introduced in 2014 and later suspended in 2015 following a successful court case against it. But the court later ruled in favour of the county thereby allowing Mombasa to collect cess on trucks carrying the commodity and other goods destined for exports.
Bomet Governor Joyce Laboso said, “We believe this cess should not be levied at the port. This move will lead to double taxation across counties to the detriment of the tea value chain. As governors form tea-growing regions, we would like to affirm our commitment to the farmers.”
She said the fight to revive the tea industry is mainly geared towards ensuring maximum returns to the farmers for subsequent development of the value chain.
Kenya’s tea sector contributes to about 7 percent of the GDP and 26 percent of the country’s foreign exchange.
Kenya is also the third largest tea producing country in the world and the leading exporter of black tea which fetches the highest market fees in the global markets.