KENYA – Kenyan cereal millers operating in the country’s capital Nairobi, have faulted the County government for introducing a new market cess for cereal products, saying the move will increase the cost of doing business.

Further, they said it will adversely affect farmers, millers and ultimately impact consumers who are already battling high input and food costs.

This comes after the Kenya Revenue Authority (KRA) and the Nairobi City County government moved in to collect cess on cereals from produces delivered to millers for processing and packaging.

The market cess which took effect on March 1 is being collected by KRA officers stationed outside the millers’ premises, on behalf of the county government.

According to KRA, it engaged in December last year before implementing the levy.

“The responsibility for paying for the cess shall be on the owner of the products and not the miller unless the miller is the owner,” said KRA deputy commissioner-county revenue division, Annastaciah Githuba.

The Cereal Millers Association (CMA) has however said the move will “adversely” affect farmers, millers and ultimately impact consumers who are already battling high input and food costs.

“CMA is concerned with the introduction of ‘Market Cess’ by KRA on behalf of the Nairobi City Council, that will be detrimental as it will increase the cost of doing business in Nairobi,” the association’s chief executive Paloma Fernandes told the Star.

According to CMA, an agricultural cess is already a form of tax that is levied by county governments, on the movement of agricultural produce from the source county as well as in transit within the county.

The idea behind paying cess was to ensure that the county of origin, which was supplying the produce, collected revenue to improve and maintain its infrastructure and services towards the agricultural sector, she notes.

“Therefore, the introduction of ‘Market Cess’   also at the county of delivery of the produce will in effect introduce double taxation on the same essential food items,” said Fernandes.

Farm produces being taxed at delivery points include maize, wheat, rice, sorghum, millet, oats and barley.

CMA represents more than 35 large grain milling companies in Kenya, who account for about 40 per cent of total grain milling capacity for maize and over 80 per cent of the wheat milling capacity.

It reaches over 10 million consumers of maize flour and over 30 million consumers of wheat flour.

Its members operate mills in Mombasa, Machakos, Mwingi, Kitui, Nairobi, Thika, Nakuru, Uasin Gishu, Kitale, Kisumu, amongst others.

The passing of the costs adds pressure to consumers who are already grappling with a high cost of living, as the impact of the Russia-Ukraine war continues to be felt in the country.

“CMA notes with the current war, between Russia and Ukraine, freight, fuel, fertiliser and ultimately food prices especially wheat prices are at unprecedented levels, this is probably the worst time to add any more costs to an environment where food prices are definitely expected to rise,” Fernandes said.

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