The Kenyan government has tabled a proposal through the Finance Bill, 2025, seeking to abolish excise duties on imported onions and potatoes. The proposed policy intends to ease consumer prices and address persistent trade disputes within the East African Community (EAC). It recommends repealing the 25% tax introduced in 2023, a levy that has been linked to increased food costs and escalating diplomatic tensions with regional neighbors.
Following the introduction of the tax, potato prices rose from $0.73 per kilo in early 2023 to $0.86 by March 2025. The measure, initially aimed at shielding local farmers, resulted in retaliatory tariffs from Uganda and Tanzania on Kenyan agricultural produce. This prompted interventions by EAC heads of state and finance ministers to de-escalate the situation.
The planned tax repeal is expected to reduce the retail cost of onions and potatoes, which are predominantly imported from Uganda and Tanzania, offering financial relief to consumers. Nevertheless, the proposal has raised concerns over the competitiveness of local farmers against lower-priced imports.
On a broader scale, the removal of these trade barriers is anticipated to improve bilateral relations with Uganda and Tanzania, both of which had imposed countermeasures in response to Kenya’s 2023 tax. The development aligns with earlier commitments by former Treasury Cabinet Secretary Njuguna Ndung’u during regional discussions, where he pledged to review levies to restore trade harmony within the EAC.
The proposal also responds to sustained appeals from local businesses and regional exporters calling for predictable, equitable cross-border trade arrangements.