By Angel Navuri: DOUBLE taxation is likely to slow down
sunflower production in the country if the current trend of heavy taxes to
farmers continues.
There is need of shifting some burden to other
players along the value chain, namely agro-processors and consumers.
A survey carried out by this paper
sponsored by PANOS Eastern Africa on the theme of poverty reduction and
economic growth found that in Kondoa and Kongwa districts in Dodoma region
sunflower farmers are heavily taxed at different levels forcing them to shift
the burden to buyers (agro-processors) in terms of higher prices, who in turn
pass the burden to the end consumers.
If this goes on, it could lead cheap
imports of sunflower leaving local farmers and agro-processors high and dry.
To meet revenue targets, the central and
local governments impose taxes on agricultural produce at different stages of
the value chain. Farmers and processors feel the burden is too harsh for them and
it is high time, some of it is shifted elsewhere or left out altogether for the
good of the industry.
They feel this can be done if policies are
designed in such a way that farmers, processors and consumers don’t have to
shoulder unbearable taxes that could eventually slowdown the sunflower sector
in the region.
In Kondoa and Kongwa investigations found
out that sunflower farmers are paying tax at different (gates), forcing them to
push the prices up.
Salima Hassan, a farmer, lamented that the
tariffs paid at the (gates) were more than the cost of transportation. She is
one of the estimated over 362,000 small-scale farmers in the central zone who
grow sunflower as a cash crop.
“There are several gates here where tariffs
are charged. We end up paying 10,000/- to 15,000/- per bag,” she says, adding
that the amount was huge for ordinary farmers.
Uncle Millo Sunflower Oil Mill proprietor,
Joseph Lwogo, sounded the alarm bells, saying the price of buying sunflower had
been jumping at alarming levels every year.
Few months the price was 30,000/- per bag,
he says, adding that today the same quantity goes for 130,000/-. He concedes that farmers are happy and more
determined than ever to increase the produce. However, he says still the farmer
is being over-exploited through double taxation.
“We
collect sunflower from different regions,” he says. By paying the market price, the processors
seek to make the industry sustainable so that the farmers can keep up the supply.
“Unfortunately farmers pay a lot of taxes
— at different gates, which is burdensome,” he says.
Despite the odds, he says projection for
sunflower production in the central zone is set to go up to 230,000 tonnes by
the end of this year from 100,000 tonnes in 2005.
A study released by Rural Livelihood
Development Company (RLDC) also conceded that farmers are taxed heavily.
The study says the produce cess is a
crucial source of revenue to the district councils but it should be abolished
or its burden shifted to the processors and consumers.
Total taxes paid by smallholder sunflower
farmers is approximately six percent of their income whereas the individual
income tax for individuals engaged in other activities at times is zero, notes
the study.
Produce cess is a major direct tax levied to
smallholder and commercial farmers. Many stakeholders said it was creating a
significant disincentive to the development of agriculture, as it is too high
and poorly administered.
The way it is administered results into
restriction in the marketing of agricultural produce as along the road in the
production areas one is expected to pay it at different gates.
Current legislation set the maximum charge
rate of 50 percent of the value but the
actual rate charged vary from one local authority to another. Also the levy is charged regardless whether
the farmer has made a loss or profit. No wonder stakeholders feel it lacks
qualities of good taxation, especially fairness and buoyancy.
Agro-processors also don’t have a respite
as they have to pay 0.3 percent industrial cess although it is significantly
lower than what the farmers pay.
Farmers also feel the pinch as the cost of
irrigation schemes is very high. According to RLDC this can be offset by
granting 100 percent tax relief on all irrigation equipment. At the moment irrigation equipment are charged
both duty and value added tax (VAT).
The prospects for the crops have never been
as high as now. RLDC says sunflower
growers are able to achieve a yield of up to 720 kilos or 12 bags per hectare.
Increasing production of high-quality seeds
by 250 tonnes can generate 21m/- for 25,000 farmers and 33bn/- for processors
in a year, says RLDC.
“Improved yields through better seeds and
farming practices for 1,000 growers can generate 300m/-,” notes the report.
Another stakeholder expressed concern that
there is lack of strategic thinking by local government officials charged with
implementing District Agricultural Development Programmes (DADPs). This could
be a major setback for serious and sustainable agricultural development in
Tanzania .
The governance advisor with Concern
Worldwide, Audax Rukonge, felt that the authorities were putting a lot of
effort in areas or crops which might not get enough returns instead of
investing in crops from which offer maximum profits.
“The integration of world markets as a
result of economic liberalization offers great market opportunities for
smallholder farmers,” said Rukonge. And for those opportunities to be realised,
unnecessary setbacks must be done away with.
ENDS