Industry, Trade and Cooperatives Cabinet Secretary Adan Mohamed has faulted county governments for charging multiple taxes in their jurisdictions.
He said yesterday the trend had led to slowed business activities in the devolved units.
Whereas counties charge cess taxes to complement allocations from the National Treasury, said the CS, care has to be taken to ensure that their actions do not make Kenyan goods non-competitive.
“We have no business charging tax to a business person when their vehicle steps into another county. Otherwise, these counties may as well declare independence,” said Mr Mohamed.
He spoke in Nairobi during the launch of a report dubbed “The burden of produce cess and other market charges in Kenya” by Kenya Markets Trust (KMT). The CS further noted that multiple cess collection points in counties had led to high cost of living. According to the report findings presented by Policy and Research Manager at KMT Chris Shimba, produce cess, is not being used by counties to improve production and distribution of the taxed commodities.
“Cess charged across counties was not necessarily ploughed back to the sector. Instead, it ended up making cost of food prohibitive and out of reach for most households,” said Mr Shimba.
The study also found that many counties do not accept permits issued by other counties for moving agricultural produce such as maize, milk, livestock, vegetables and fish. Instead, traders are taxed for entering each county.
Speakers at the launch said as much as cess was a noble ideas for counties, its structure should be changed so that traders do not feel burdened. The study, which covered 12 counties and interviewed 763 traders, found that cess was highest on onions (29 per cent of total distribution cost), causing a multiplier effect on the price of the commodity.
For a 25kg crate of tomatoes, 15 per cent of total cost goes to cess while brokerage eats 11 per cent. The study also found that counties had left fish traders in the hands of brokers who take 52 per cent of total distribution cost.
On basis level, the study found that a simple meal of ugali and sukumawiki, costing about Sh150, will have nine per cent of cost as cess, five per cent as market levies and six per cent as broker’s fee.
While a one per cent increase was found to cause 0.7 per cent increase in average distribution costs, a similar increase in the unofficial levies is causing 0.6 per cent rise in distribution budget.
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