Governor Lusaka Warns New Tax Measures Could “Choke” Kenya’s Agriculture Sector

 

 Bungoma Governor Kenneth Lusaka has raised alarm over the government’s recent tax proposals, warning that the measures could severely damage Kenya’s agricultural sector if not urgently reviewed.

Speaking during a high-level breakfast meeting between agricultural value-chain stakeholders and officials from the National Treasury in Nairobi, Lusaka said increased taxation on key agricultural inputs is driving up production costs and threatening the livelihoods of millions of farmers.

The governor highlighted concerns over rising VAT charges, import duties, and fragmented county cesses, noting that these levies have made essential inputs—including fertilizer, seedlings, packaging materials, and cold-chain machinery—significantly more expensive.

“We cannot overtax agriculture and expect growth,” Lusaka said. “These policies are squeezing farmers, weakening cooperatives, and undermining our export competitiveness.”

One of the most contentious proposals, he said, is the introduction of a 5% withholding tax on produce sold through cooperatives. According to Lusaka, this move would disproportionately affect smallholder farmers, who depend heavily on cooperatives for aggregation, marketing, extension services, and access to credit.

Lusaka also pointed out the contradiction between agriculture’s significant contribution to the economy and the limited funding it receives. Although the sector accounts for 22% of Kenya’s GDP and employs more than 40% of the population, it receives only 3% of national public spending—far below commitments made under the African Union’s Malabo Declaration.

To avert what he termed an imminent crisis, Lusaka proposed a set of immediate interventions, including:

• A time-bound tax relief package on essential agricultural inputs

• A waiver of import duties for processing and cold-chain equipment

• Harmonization of county levies to reduce duplication and lower operational costs

• Establishment of a National Agricultural Value-Chain Development Fund to support long-term competitiveness

Lusaka urged the National Treasury to adopt a more balanced approach to fiscal consolidation—one that stabilizes public finances without stifling key productive sectors.

“Fiscal consolidation must be growth-friendly,” he emphasized. “Counties are ready to work with Treasury to unlock investment, protect farmer livelihoods, and restore the competitiveness of our agricultural value chains.”