Tea farmers might be denied a assured subsidy kitty that was speculated to cushion them from fluctuations in world tea costs, by way of the Tea (Modification) Invoice, 2023.
The Invoice, which underwent the primary studying within the Home final week, fingers 60 p.c of the cash that might be raised from the tea levy to the Tea Board of Kenya (TBK). The remaining 40 p.c might be allotted to the Tea Analysis Basis.
The one p.c levy on tea imports and exports was launched by the Tea Act, 2020. Nonetheless, this levy has not been operationalised but after dozens of tea companies went to courtroom in search of it to be declared unconstitutional.
The courtroom case is ongoing. This has meant that up to now, the Tea Board continues to largely depend on exchequer funding.
“The tea levy collected beneath subsection (2) shall be apportioned as follows: 60 per centum shall be utilized by the Board in furtherance or train of any operate or energy of the Board; and 40 per centum shall be remitted to the Tea Analysis Basis for the execution of the operate of the Basis,” says the Invoice.
Within the Act which the Invoice seeks to amend, 50 p.c of what the Tea Board collects from the levy is utilized for revenue or worth stabilisation for tea growers. An extra 15 p.c is meant for use by the company for its operations, 20 p.c to the Tea Analysis Basis and the remaining 15 p.c is meant for use for infrastructure improvement within the tea sector.
The Invoice presently earlier than the Home was sponsored by Bomet Senator Hillary Sigei and Konoin MP Brighton Yegon. Kenya exported tea value a document Sh180.57 billion in 2023, marking a pointy improve from Sh138.09 billion within the earlier 12 months. Which means that if the tea levy was operational on the time, the Tea Board would have collected a tea levy of Sh1.8 billion from tea exports.
Ought to the Invoice cross, it means that it’ll now be on the discretion of the Tea Board to determine whether or not in any respect to allocate cash in direction of stabilization of earnings for tea farmers.
Apparently, the Invoice has additionally left Part 54 of the Tea Act, 2020 in place. The part establishes a Tea Fund, which might be funded by taxpayers by way of the funds, cash from the tea levy, and grants and donations.
The Fund is meant to stabilize earnings by tea farmers. The movers of the Invoice have left this part untouched, primarily shifting the burden of stabilization of tea costs from monies collected from the tea levy to taxes paid by Kenyans.
It additionally signifies that farmers are now not assured that the tea worth stabilization kitty may have funds, as the cash might be allotted by way of the nationwide funds by the Nationwide Meeting.
