Kagwe calls for review of taxes on horticultural products

Agriculture Cabinet Secretary Mutahi Kagwe has called for a review of taxes levied on horticultural products, terming them unfair and punitive.

The CS noted that the taxes should be dealt with as the horticulture sector continues to deal with the high cost of production caused by the rise in global fuel prices.

His sentiments came as flower farmers warned that the high cost of production, coupled with failure by the government to pay VAT refunds, was eroding investor confidence, noting that freight charges and fuel prices have more than doubled, with the situation worsening owing to the US-Iran war.

The CS spoke during the Naivasha Horticultural Fair, where he vowed to engage with his Treasury and Trade counterparts on the issues hampering growth in the sector.

“We need to listen to the horticultural sector. There are some levies they should not be paying. For example, if you say a horticultural grower is an industry, a manufacturing concern, you charge them as such; that’s unfair because they are not an industry,” he said.

“They are agricultural product producers. So we are debating all these things. We are liaising with my colleague in Trade to make sure the sector is treated fairly, and you know you cannot get growth out of taxation; you get growth out of production.”

Horticultural sector players have also called on the national carrier to consider a freight division to cater to fresh produce only.

“So we really want Kenya Airways, which is our starship airline, to open a freight division so that they do only freight transportation of our fresh produce. If that is not possible, then can we talk about open skies a little bit more? I think open skies is important so that we can bring in more planes, perhaps,” said Elgon Kenya MD Bimal Kantaria.

Naivasha Horticultural Chairman Fair Richard McGonnel added, “Some of these farms are owed tens of millions of shillings in VAT refunds, and don’t forget the big farms in Kenya have 14,000 staff. All these petty taxes-there are a lot of petty taxes that shouldn’t be there. KEBS charges the growers a small percentage, but I think it’s wrong.”