No clause in Finance Act dicates taxing of farmers, MP Kimani

"No clause in the Finance Act requires avocado farmers to be taxed."

In Summary
  • Kimani said the Finance Act only calls for farmers to be registered and not to be taxed as it has been widely claimed.
  • The registration, he said, was to protect farmers from buyers who import produce from other countries and say it is locally sourced.
Molo MP Kuria Kimani addressing Murang'a farmers on March 20, 2024.
Molo MP Kuria Kimani addressing Murang'a farmers on March 20, 2024.
Image: Alice Waithera

National Assembly finance committee chair  Kuria Kimani has said the Finance Act does not dictate the taxing of farmers.

Kimani said there has been misunderstanding over claims that avocado farmers are supposed to pay taxes.

The clarification came after avocado farmers from Murang’a County last month vowed not to pay tax said to be Sh5 for every Sh100 they make from their farm produce.

The farmers complained that they are already grappling with the high cost of living that has pushed the cost of farm inputs up while their earnings remained meagre.

The farmers who spoke at Kibereke grounds in Kandara directed their anger at a team of KRA officers who had been invited to explain more about the tax.

KRA officers are said to have told farmers that they will have to produce Electronic Tax Invoice Management System (e-TIMS) invoices every time they make a sale.

The farmers sentiments were backed by a team of leaders from Murang’a County who vehemently opposed the law saying it was punitive to small scale farmers.

But Kimani said the clause was not meant to impose a tax on agricultural produce but to provide for registration of farmers under e-TIMS.

“I know that law clause by clause. I led the lobbying for it to be passed and there is no clause we put in it requiring avocado farmers to be taxed,” Kimani told coffee farmers in Murang’a County on Wednesday

The registration, he said, was to protect farmers from buyers who have  been importing produce from other countries and saying it is locally sourced.

This, he said, also occurred in the dairy sector and disadvantaged local farmers.

The MP said the registration would also enable the government to establish how much produce a particular farmer produces.

“There is no law that imposes taxation on our farmers. What is there is a requirement to register on e-TIMS. Now I hear KRA had come to you to ask for taxes. We will amend this law again and again until it is clear."

On Tuesday, Deputy President Rigathi Gachagua met a group of over 100 stakeholders in the avocado sector and directed Cabinet Secretaries for Trade, Agriculture, Co-operatives and Finance to establish a framework that will exempt primary farmers from the tax.

In the Medium term revenue strategy 2023, the state announced that it would apply a five percent withholding tax on all agricultural produce sold to co-operatives in a bid to raise Sh14 billion in the next three years.

Finance Cabinet Secretary Njuguna Ndung’u said the agriculture sector is undertaxed as it contributes about 21.2 percent of the Growth Domestic Product (GDP) yet its tax revenue contribution is less than 3 percent.

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