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Within the simply over one yr that it has been on the helm of the nation, President William Ruto’s administration has change into synonymous with unpopular taxes and levies. The President’s attraction to fellow Kenyans to sacrifice now and allow him to put the inspiration for a greater future has largely been taken with a pinch of salt.
Now, there may be extra within the pipeline that would worsen the scenario. Already, the prevailing excessive value of residing and skyrocketing costs of meals and different primary commodities are a nightmare for almost all of Kenyans, who depend on agriculture for his or her livelihood. The information that the federal government could possibly be eyeing Sh14.3 billion a yr from a farm tax will come as a shock to many. That is the proposed withholding tax of 5 per cent on farm produce offered by means of co-operatives.
Nevertheless, specialists concern that this new measure geared toward widening the tax base may change into counterproductive. It’s prone to make farmers shun co-operatives and search casual channels to promote their produce on to the customers.
An evaluation of official knowledge exhibits that by the tip of 2022, chosen crops valued at Sh286 billion have been offered by means of varied advertising and marketing boards, together with co-operative societies and factories. This might have earned the federal government Sh14.3 billion had the proposed tax measures been in place.
The federal government has introduced in its income technique that within the three fiscal years from July this yr to June 2027, it may impose a 5 per cent withholding tax on all farm produce offered by means of co-operative societies. Agriculture, the casual and digital sectors are a few of the areas which are troublesome to tax. Whereas agriculture’s contribution to the GDP is sort of 22 per cent, its contribution to tax income, the Treasury says, is lower than three per cent, that means that the sector is undertaxed.
Nevertheless, the farmers are grappling with excessive enter prices, together with transport. The federal government ought to tread fastidiously, because the taxation may backfire. Whereas it wants to boost income to fulfill its monetary commitments, together with paying the nationwide debt, the federal government mustn’t go for measures that would simply mess up the whole lot.
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