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Agriculture Minister proposes removal of VAT on cotton
Mar '09
The Agriculture Minister, Mr Ruto announced that he is proposing the government to waive off Value Added Tax (VAT) on locally produced goods and ginned cotton in particular as a means to revitalize the agriculture sector.

He said, “Ginners who buy cotton from farmers, have to pay 16 percent VAT, when selling it to the textile mills and in an industry which is mired in recession, sufficient incentives have to be provided and waiver of VAT is a step in the right direction”.

He also announced that cotton seeds would now be manufactured by Kenya Seed Company and registered seed merchants will now have to be certified by the Kenya Plant Health Inspectorate Services.

In the meeting with representatives of the cotton industry, they have advised that cotton prices should be maintained at Sh30 per kilo to encourage spinners to buy from local producers and providing free seeds should be discontinued since it was not sustainable.

Among other measures to support the cotton industry, Mr Ruto has suggested that imported cotton and clothing should attract higher duties, which would lead to demand for domestically manufactured products, since imported products would turn costly.

He also suggested that this extra income derived from raising duties should be diverted to promotion of local cotton industry, since it could improve the livelihood of over 200,000 cotton farmers in the country.

He concluded by saying that, since the industry has showed signs of recovery after the government released a stimulus package of SH 750 million, these measures would go along way in a quick turnaround of local industry.

Fibre2fashion News Desk - India

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