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Tea farmers will be denied a guaranteed subsidy kitty that was supposed to cushion them from fluctuations in global tea prices, through the Tea (Amendment) Bill, 2023.
The Bill, which underwent the first reading in the House last week, hands 60 percent of the money that will be raised from the tea levy to the Tea Board of Kenya (TBK). The remaining 40 percent will be allocated to the Tea Research Foundation.
The one percent levy on tea imports and exports was introduced by the Tea Act, 2020. However, this levy has not been operationalised yet after dozens of tea firms went to court seeking it to be declared unconstitutional.
The court case is ongoing. This has meant that so far, the Tea Board continues to largely rely on exchequer funding.
“The tea levy collected under subsection (2) shall be apportioned as follows: 60 per centum shall be applied by the Board in furtherance or exercise of any function or power of the Board; and 40 per centum shall be remitted to the Tea Research Foundation for the execution of the function of the Foundation,” says the Bill.
In the Act which the Bill seeks to amend, 50 percent of what the Tea Board collects from the levy is applied for income or price stabilisation for tea growers. A further 15 percent is supposed to be used by the agency for its operations, 20 percent to the Tea Research Foundation and the remaining 15 percent is supposed to be used for infrastructure development in the tea sector.
The Bill currently before the House was sponsored by Bomet Senator Hillary Sigei and Konoin MP Brighton Yegon. Kenya exported tea worth a record Sh180.57 billion in 2023, marking a sharp increase from Sh138.09 billion in the previous year. This means that if the tea levy was operational at the time, the Tea Board would have collected a tea levy of Sh1.8 billion from tea exports.
Should the Bill pass, it means that it will now be at the discretion of the Tea Board to decide whether at all to allocate money towards stabilization of earnings for tea farmers.
Interestingly, the Bill has also left Section 54 of the Tea Act, 2020 in place. The section establishes a Tea Fund, which will be funded by taxpayers through the budget, money from the tea levy, and grants and donations.
The Fund is supposed to stabilize earnings by tea farmers. The movers of the Bill have left this section untouched, essentially shifting the burden of stabilization of tea prices from monies collected from the tea levy to taxes paid by Kenyans.
It also means that farmers are no longer guaranteed that the tea price stabilization kitty will have funds, as the money will be allocated through the national budget by the National Assembly.
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