Written by Carolyn Wamalwa 2012-08-01 16:48:00 Read 550 Times

Livestock Minister Mohammed Abdi Kuti signing a petition from stakeholders in the dairy sub sector appealing the ministry to review certain sections in the VAT 2012 ACT. [PHOTO | Isura Christopher | West Fm]

Key players in the dairy subsector have urged government to review certain provisions included in the VAT 2012 Act to cushion the dairy industry from collapse.

Livestock Minister Mohammed Abdi Kuti while receiving a petition from the aggrieved stakeholders at the ministry’s headquarters, explained that while it is necessary for government to impose tax, the exercise should be done with caution to allow for growth of key sectors, to increase employment opportunities as well as poverty eradication.

“The proposed bill touches on growth of a vibrant sector that has just woken up from a very difficult past, we have to understand that government cannot function without revenue realized from imposing tax, but we are saying that it should be careful with the way taxation is done,” said the minister.

The minister noted that while the sector is offering employment opportunities to the youth, the VAT Bill which proposes 16 percent VAT tax on all milk products, if implemented in the current form will slay employment as well as aggravate the collapse of related sectors and dairy clusters.

The stakeholders are in the petition seeking for the zero rating of all milk and dairy related products as well as farm inputs and equipment, to aid milk production and ensure the growth of the dairy industry.

Further, they propose to expunge the term ‘unprocessed milk’ from the VAT Bill, which has been singled out to be tax exempt, saying that the sale of unprocessed milk is banned under the Dairy Act and its use could lead to illicit trade.

The stakeholders regretted that once the Bill is enacted, the sector risks negating achievements realized, reduction in government revenue which is accumulated from the sale of dairy products as well as increased milk borne diseases including Brucellosis as a result of consumption of unprocessed milk.

They further expressed their fears that the proposals in the Bill were suicidal and that the dairy sector could soon be phased out, leading to an increase in milk and related products prices as well as the collapse of the industry; this forcing the country to be a net milk importer, a situation that could lead to economic instability.

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