By
Tom Odhiambo
Title: The Burden of Produce Cess and Other Market Charges in Kenya; Author: Bayesian Consulting Group Limited; Publisher: Kenya Markets Trust; Language: English; Online: 68 Pages.
Cess is a very old tax. It used to be lied on wealthy members of the society who sought some public services. As a colonial tax, cess was levied on goods – mainly agricultural produce – supposedly to raise taxes for the local government.
It was assumed that the money collected through cess would be used for local development. The justification for cess in many parts of the Kenyan countryside is that it is to be spent on developing, improving and maintain roads, schools, water, sanitation or health services, among others.
That is the ideal situation or claim. However, where this tax is collected, there is a significant disparity between the promise of the services to be rendered and the services delivered. The evidence is stark for any observer.
A drive to any of the counties that produce raw material, especially farm produce, leads to a barrier across the road. The barrier is generally marked CESS COLLECTION POINT. It is generally manned by individuals who look more like security officers than tax collectors.
But there is actually a tax agent, not so far away. She – they always tend to be women – will have a bunch of receipt books in her hands. One can only guess that the receipts she issues are genuine, and that the money collected goes into the rightful account.
But this isn’t even the issue with cess. The problem with cess is that it is double taxation. In fact, in Kenya cess could be even triple taxation.
Consider this: an individual transporting fresh produce, say sukumawiki from Uasin Gishu County to Vihiga County through Nandi County could easily end up paying cess at three different collection points.
As research by Kenya Markets Trust done in 2016 notes, some counties refuse ‘to accept permits issued by other counties.’
The report, The Burden of Produce Cess and Other Market Charges in Kenya shows, cess adds a significant value to the final cost of the produce to the producer and to the sale price of goods delivered to the market.
To the consumer, cess adds between 5% and 10% to the final cost of the food one consumes. But it is the farmer who suffers most.
The Kenyan farmer suffers a range of costs (formal and informal taxation, if you like) before delivering his produce to the market. Among these include storage, packaging, market levies, loading and offloading, brokerage (the middleman), transport, cess, among others.
Of all these levies, only cess would be deemed beneficial to the producer. The justification for charging the farmer or livestock owner or fisherman this tax is that it will improve services and goods that have a direct effect on the individual’s production.
Thus, there is a good reason to pay it. Or rather, it is not worth avoiding. In any case because it is directly levied, escaping from it isn’t easy.
Yet, evidence on the ground suggests that this is probably an unnecessary tax. It possibly denies the producers extra income that would go a long way in improving their livelihoods.
Roads in agricultural parts of Kenya, cattle dips in livestock rearing regions of the country, landing bays on the shores of Kenya’s lakes, markets, fresh farm produce collection points, health centers in the countryside, schools, among other utilities that should be developed from cess are generally unattended.
In fact, some of the cess collection points are found on such muddy roads that vehicles collecting the tax have no option but to stop and pay.
By the time the farmer or whoever is ferrying the produce to the market pays the levy, they would have travelled through a worse stretch. Nevertheless, cess continues to be collected.
How can farmers, livestock keepers, fishermen etc. deal with this situation where they get taxed supposedly to pay for services and goods which are actually paid for by the central government in most cases?
Can’t the taxpayers agitate for such levy to go into a common pool, which would then be administered locally, with the local community monitoring projects that are funded by such a tax?
Is there a possibility that the local communities themselves could agree on what amount to levy, which could be used to complement what the local or central government collects?
These questions are important to ask because the history of cess collection in Kenyan sits quite uncomfortably with the promised development in the areas where it is collected.
For instance, farmers in highly productive regions of Kenya routinely complain about lack of farmer support services, poor roads, inadequate storage facilities, inaccessible markets, poor prices because of rogue middle men (the middlemen will buy the produce at throwaway prices because it won’t reach the market on time), expensive or poor farm inputs etc.
These complaints tend to show that the cess collected isn’t really spent on the goods and services for which it was primarily meant.
In the end, very hardworking farmers remain poor and dependent on an exploitative farm-to-market chain system that would be eliminated if the cess collected were used correctly. Why retain this tax when it doesn’t really serve its purpose?
The writer teaches at the University of Nairobi. He can be reached at: tom.odhiambo@uonbi.ac.ke; 0720009155
