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Uproar over tax removal on wheat imports

NAIROBI, Kenya, Jun 9 – The Kenya Landowners and Landusers Association (KELLA) has registered strong objections to the zero-rating of import duty on wheat grain by Finance Minister Uhuru Kenyatta in the 2011/2012 budget.

Mr Kenyatta directed that wheat imports be subjected to no tax for the next one year, a move meant to mitigate food shortage and effects of the ongoing drought in the country.

While appreciating the short-term benefits of the move, the association\’s Chief Executive Officer Henry Mugambi said the duty waiver was going to cause long-term effects to local farmers who will now be forced to compete against imported, subsidised produce from western countries.

"We applaud the investment into infrastructure, agribusiness and the efforts to reduce the cost of food. However the reduction of duty on imported wheat and maize will only provide a short term benefit to the wananchi at the long term expense of farmers, farm workers and food security across the country," he said.

He called on the government to extend tax credits to farmers, reduce the cost of inputs and strive to remove dependence on cheap, subsidised imported cereals.

"Food production goes through a value chain. When the value chain has got weaknesses whether in storage, transportation or financing, then there is a big problem. Our farmers require a smooth distribution system," he explained.

"Food is rotting in the North-Rift while people are dying due to starvation!"

He further said there needs to be a balance between the millers\’ desire for profits and the farmers\’ needs for incentives to keep farming.

"Farmers in Kenya require tax credits, reduced tax on inputs and removal of dependency on these imported cereals. There also needs to be a balance between millers making profits and incentives for farmers to grow more," he stated.

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"We encourage our government to plan ahead of time because some of these (food) shortages are not brought by natural calamities only, but they come due to poor planning," he said.

Nairobi town clerk Philip Kisia in the meantime lauded the increase of the Local Authorities Transfer Fund (LATF) in the budget saying it would assist local authorities improve their service delivery.

On Wednesday, the Finance Minister raised the LATF funds to Sh17.3 billion up from Sh12 billion allocated in the 2010/2011 fiscal year.

Mr Kisia said the increase would enable local authorities perform their duties effectively. He however pointed out that Nairobi City should be given a large portion of the funds since it contributes a large percentage to the GDP.

"The Capital city that accounts for 57 percent of GDP requires to be treated more seriously. We should not be put in the same basket with other local authorities," he argued.

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