Ruto targets farmers with new 5% tax in bid to raise more revenue
President William Ruto’s administration is now targeting farmers with a new tax to collect more revenue and fund its projects.
The move will see farmers fetch less than what they currently make with the high prices of inputs and with farmers frequently complaining of earning low for tea, coffee, macadamia nuts, maize, milk among other products.
Citing a Medium-term Revenue Strategy posted by Treasury CS Njuguna Ndung’u, Citizen TV reported that the government wants every farmer delivering their produce to the market to pay Sh5 for every Sh100 obtained from sales.
Defending move, the CS noted that the Agricultural sector is undertaxed and will consequently be the next target in a series of new taxes that have been introduced by the Kenya Kwanza regime.
“The Kenyan economy is dependent on the agricultural sector contributing 21.2% of GDP and the highest employer compared to other sectors.
“The sector has unique challenges making taxation difficult…The sector is highly informal, cash based and characterized by the notion that the sector should not be taxed.” Reads the strategy in part.
Treasure now maintains that it will roll out an aggressive strategy to raise maximum tax from the sector.
“The government will introduce a final withholding agricultural tax at a rate no more than 5% of the value of the produce delivered to cooperatives or other organized groups.”
Tax payer education to ensure that farmers are aware of their role is part of the government’s strategy to raise maximum tax from the sector.
Should the government proceed with its plans, farmers will part with Sh5 for every sale of Sh100 made.
Ripple effects and job losses
Bearing in mind the high cost of labour, farm inputs and other challenges in the sector, farmers are likely to be hit hard by the same.
The cost will most likely be passed on to consumers, resulting in higher prices of commodities.
Although the sector employs many Kenyans, it is characterized by low wages and subsistence farming.
In the wake of the increased taxation rolled out by the government, the opposition has vowed to resume protests should the Finance Act 2023 fail to be scrapped.
Businesses have also borne the brunt of the current economic environment with job cuts reported as other companies close operations in Kenya.
A report by the Federation of Kenya Employers placed the number of Kenyans who had lost their jobs in the last one year at 70,000.
In a country where one income earner supports several, including siblings, relatives, children and spouses, the ripple effect of massive job losses cannot be downplayed.
