Levy could crush Kenyan tea industry, warns chamber

Tea_cropTea is one of Kenya’s highest earning export crops. (Image source: Subhadip Mukherjee)Kenya National Chamber of Commerce and Industry (KNCCI) has warned that the country’s tea industry faces disaster if the government continues to impose additional customs charges to the crop

The KNCCI has blamed the January 2012 introduction of an Ad Valorem levy by the country’s agriculture minister, which added an additional one per cent onto the customs value at the point of export and import, for tipping the country’s tea industry towards the point of collapse.

The new charges have led to an increase from KES0.46 (US$0.01) to KES2.40 (US$0.02) levy per kilogramme of tea and form part of the Kenya Revenue Authority’s (KRA) attempts to introduce additional stringent regulations on non-Kenyan tea.

KNCCI Mombasa county chairman James Mureu described the levy increase as a potential killer of one of Kenya’s top foreign exchange earners.

Mureu told Kenyan daily The Star, “The new levy and the KRA proposal for handling of non-Kenyan teas is a very retrogressive step of very harsh controls that if implemented will kill tea production and trade in the country.

“The Mombasa tea industry is already facing competition from Dubai,” he remarked.

The chamber also warned that additional plans to take tea auctioning away from Mombasa to Nairobi would lead to the double handling of the product, as the product would most likely have to return to Mombasa for export.

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