Farmer’s party has reviewed the finance bill as presented to parliament on 04th May 2023 the party has noted that the bill proposes amendments to the country’s tax alongside proposed changes to other acts.
The party says that it has appreciated the bill as it sets an agenda geared towards economic turnarounds and inclusive growth with the aim of increasing investments in at least five sectors with agricultural transformation.
The party has stated that the expected implementation of the interventions will stimulate the economy with a projected 6.1% GDP growth against the estimated 2022 GDP growth of 5.5%.
Farmers party still decries the paltry 1.39% allocation to agriculture in the current budget against the Maputo declaration where Kenya is a signatory requiring a minimum allocation of 10% to agriculture.
Party Leader, Irungu Nyakera has said that the proposed reclassification from zero to exempt will have significant impacts on the agriculture sector and the overall economy saying that it will increase the cost of production for the suppliers passing the cost of farmers, which will ultimately lead to an increase in the cost of food.
In the subsidized fertilizer program any input VAT incurred in supplying the fertilizer will become a cost to entities supplying to the government.
Higher farm input costs including fertilizer would be a setback for the government fighting a myriad of challenges around food and nutritional security including a spike in inflation and the effects of a raging drought, which had gripped the country for most of the past two years.
Further Nyakera says that suppliers will not be able to claim input VAT, VAT levied on farming inputs hence manufacturers will be forced to absorb or pass on the cost of unrecovered input in taxes of farmers which will worsen Kenya’s position as the most expensive nation for farmers in the region.
The Bill changes the status of the supply of maize flour, wheat or meslin flour, and maize flour containing cassava flour by more than 10 percent in weight from exempt to standard rated.
Nyakera says that purposely they submitted the request that the agricultural items that have been moved from Zero rated to exempt or from exempt to standard-rated taxation be reverted to their current status.
Hon Irungu Nyakera believes the tax loss from the proposal would be recovered by reversing some proposals such as VAT exemptions for people buying helicopters and light aircraft, among other benefits that go to wealthy Kenyans at the expense of the average mwanachi.
The proposal will allow farming to remain competitive and maximize the high costs that farmers will otherwise have to bear.
