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{
"id": 1569842,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1569842/?format=api",
"text_counter": 54,
"type": "speech",
"speaker_name": "Hon. John Mbadi",
"speaker_title": "The Cabinet Secretary for National Treasury and Economic Planning",
"speaker": null,
"content": "pension scheme faced challenges, especially the pension scheme for POSTA. There is already a process going on to make sure that is addressed. Finally, on Senator Eddy’s question on defrauding of pensioners by banks, this will be dealt with automatically through automation. Manual systems are open to abuse. We have also identified that some pensioners have been defrauded through collusion even between pension and bank staff. That is something we are addressing through automation."
},
{
"id": 1569843,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1569843/?format=api",
"text_counter": 55,
"type": "speech",
"speaker_name": "Hon. Kingi",
"speaker_title": "The Speaker",
"speaker": null,
"content": " We will now move to Question No.035 by the Senator for Kirinyaga County, Hon. (Dr.) Murango. You may proceed to ask your question."
},
{
"id": 1569844,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1569844/?format=api",
"text_counter": 56,
"type": "scene",
"speaker_name": "",
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"speaker": null,
"content": "Question No.035"
},
{
"id": 1569845,
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"text_counter": 57,
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"speaker_name": "",
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"speaker": null,
"content": "BREAKDOWN OF TAXES AND LEVIES IN THE TEA SUPPLY CHAIN"
},
{
"id": 1569846,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1569846/?format=api",
"text_counter": 58,
"type": "speech",
"speaker_name": "Sen. (Dr.) Murango",
"speaker_title": "",
"speaker": null,
"content": "Thank you, Mr. Speaker, Sir. I beg to ask the Cabinet Secretary for National Treasury and Economic Planning the following Question. (a) Could the Cabinet Secretary provide a breakdown of all taxes and levies imposed throughout the entire tea-supply chain? (b) What specific taxation measures is the Ministry planning to implement in the Financial Year 2025/2026 to eliminate double taxation and other unnecessary taxes that overburden farmers and stakeholders in the tea industry? (c) Could the Cabinet Secretary outline the challenges faced in previous attempts to eliminate some of these excessive taxes and levies on tea and explain actions taken to address them?"
},
{
"id": 1569847,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1569847/?format=api",
"text_counter": 59,
"type": "speech",
"speaker_name": "Hon. Kingi",
"speaker_title": "The Speaker",
"speaker": null,
"content": " Hon. Cabinet Secretary, you may respond. I note that the response is fairly lengthy. In the interest of time, please, just try to paraphrase it because we already have hard copies. We will be following as you paraphrase."
},
{
"id": 1569848,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1569848/?format=api",
"text_counter": 60,
"type": "speech",
"speaker_name": "Hon. John Mbadi",
"speaker_title": "The Cabinet Secretary for National Treasury and Economic Planning",
"speaker": null,
"content": " Thank you, Mr. Speaker, Sir, I notice also that my response is fairly too long. I will not go through it in the traditional way. Question No. 35 by Sen. Murango was on taxes and levies imposed throughout the entire tea supply chain. The first page is basically talking about the significance and importance of the tea subsector as one of the drivers of economic growth in this country. We all know the contribution of tea to our economy. So, I have just explained that in line with the Bottom-Up Economic Transformation Agenda (BETA), if you like. In the Financial Year 2023/2024, the Government implemented a number of interventions specifically for the tea subsector, which included provision of processing equipment to tea cooperatives, establishment of a tea value addition hub and promotion of investment into the hub, export market development and export promotion and provision of fiscal incentives and establishment of our warehouses for value-added tea in key development markets. The electronic version of the Senate Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Director, Hansard and AudioServices, Senate."
},
{
"id": 1569849,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1569849/?format=api",
"text_counter": 61,
"type": "speech",
"speaker_name": "Hon. John Mbadi",
"speaker_title": "The Cabinet Secretary for National Treasury and Economic Planning",
"speaker": null,
"content": "Mr. Speaker, Sir, these are ongoing reforms. I have also indicated how much tea has been contributing to our economy. For export earnings, I have already also explained how much we are getting in terms of export earning contributed by tea subsector. In the Financial Year 2025/2026, as outlined in our Budget Policy Statement (BPS) for 2025, the Government will be executing the following key interventions to further boost the tea subsector, and that is already enumerated: Value addition, market development and farmer support. These are explanations about what the Government is doing on infrastructure, including putting up infrastructure, especially such as in Dongo Kundu and special economic zone and constructing research and development facilities for tea. So, coming back to the question where I was asked to explain or provide a breakdown of all taxes and levies imposed throughout the entire tea supply chain, I respond as follows - tea subsector benefits from numerous tax incentives. In fact, that supports its growth and sustainability, making it a thriving subsector. This subsector is one of the subsectors that is cushioned and enjoying incentives as opposed to getting to a sector that is subjected to additional taxes. I have just explained some of the exemptions or tax incentives, especially on Value Added Tax (VAT). There is no VAT charged at the farming level for tea on inputs such as fertilizers. Agricultural services and farming tractors are exempt from VAT. I have also indicated that imported agricultural machinery used for land preparation are duty-free, but only attract VAT at 16 per cent. Railway Development Levy is at 2 per cent while Import Declaration Fee (IDF) is at 2.5 per cent of the customs value. For tea processing, 100 per cent investment deduction by tea factories located outside the cities of Nairobi, Mombasa or Kisumu are also exempt. I think we should now add Eldoret and Nakuru, although there is also thinking that we should remove this requirement at all of only cities, because cities are becoming many and again, we feel it is unfair to the cities. Machinery used for tea processing is currently duty-free under East African Community (EAC), common tariff, external tariff. Income of an entity including tea processing factories are charged corporation tax at the rate of 30 per cent like any other factory. Processed tea sold in the domestic market is objected to VAT at 16 percent. Transportation services on unprocessed tea are exempt from VAT. Unprocessed green tea is VAT exempt and locally purchased tea for value addition before exploitation is zero rated. Marketing and distribution: Under marketing, tea brokerage services enjoy exemption from VAT. Locally purchased tea for value addition before exportation is zero rated. Mr. Speaker, Sir, manufacturers of packaging materials locally for use by exporters of locally produced goods such as tea and horticultural products import raw materials duty-free under the EAC duty remission scheme--- The electronic version of the Senate Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Director, Hansard and AudioServices, Senate."
},
{
"id": 1569850,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1569850/?format=api",
"text_counter": 62,
"type": "speech",
"speaker_name": "Hon. John Mbadi",
"speaker_title": "The Cabinet Secretary for National Treasury and Economic Planning",
"speaker": null,
"content": "Packaging materials of all goods, including for tea also attract 16 per cent like any other. Imported packaging materials attract excise duty at the 25 per cent of the excise value. However, I will give the latest information about that. Various Government agencies charge fees or levies for services rendered to producers or manufacturers. In the Finance Bill of 2025, we have done two things- (i) We are proposing to exempt packaging materials used for tea and coffee from VAT. This exemption will only apply when packaging materials are imported or locally purchased with a recommendation from the Cabinet Secretary responsible for Agriculture, Livestock and Fisheries given that the use of these materials is not exclusive to coffee and tea packaging. This measure aims to protect these crucial sectors while also safeguarding government revenue. (ii) The second thing that we have done is under Custom Duty. On the custom side, Kenya was granted a stay of application of the EAC Common External Tariff on certain paper product to apply a higher duty rate of 25 to 35 to support domestic packaging materials. This negatively impacted exporters such as the tea industry. To address this, Kenya did not request an extension of the stay of application of the EAC Common External Tariff on these paper products during this year's EAC pre- budget consultations which I led in Arusha. Mr. Speaker, Sir, we have now gone back to the EAC Common External Tariff (CET) rates of 10 per cent like any other country in the East African region. (b) Regarding specific taxation measures that the Ministry is planning to implement in the Financial Year 2025/2026 to eliminate double taxation and other necessary taxes that overburden farmers and stakeholders in the tea industry, I wish to respond as follows- There is no double taxation in the tea subsector. As regards to specific tax measures for the coming financial year, we have already reviewed the submissions from the public. I think this answer should be amended to read that we have already considered. I have just read some of the steps that we are taking to reduce taxation which would support the tea subsector. I have mentioned the various incentives. I do not want to repeat. (c) On challenges faced in previous attempts to eliminate some of these taxes and levies on tea and the action taken to address them, I wish to respond as follows- Mr. Speaker, Sir, while there may be challenges affecting the tea subsector the national Government continues to extend numerous incentives to the subsector as outlined above. From consultation with the regulations on the tea subsector, various actions by various Government entities are ongoing to address the burden of the fees of levies in the tea subsector. Some of these measures include enactment of The Tea Act 2020 which reduced the management fee payable by tea farm factories from 2.5 per cent to 1.5 per cent, that is saving tea farmers approximately 1 billion annually from management fee to Kenya Tea Development Authority. There is the ad valorem levy of one per cent of the customs value of exported teas which was scrapped in 2016. The agricultural produce sales of 1per cent of green leaf was also scrapped in 2016, saving quite significant amount. Since July 2016, the Government replaced the The electronic version of the Senate Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Director, Hansard and AudioServices, Senate."
},
{
"id": 1569851,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1569851/?format=api",
"text_counter": 63,
"type": "speech",
"speaker_name": "Hon. John Mbadi",
"speaker_title": "The Cabinet Secretary for National Treasury and Economic Planning",
"speaker": null,
"content": "levy with a Government grant to fund operations of the Tea Research Institute and the Tea Board of Kenya, which support the tea industry development programmes such as research in tea, trade promotion and market development, amongst others. In conclusion, Kenya's tea industry remains a vital pillar of our economy, supporting millions of livelihoods and contributing significantly to national development. Through the BETA, the Government is committed to strengthening the tea value chain to ensure sustainable growth. I thank you."
}
]
}