Finance ministers from the Federal Government of Somalia (FGS) and Federal Member States (FMS) have announced intentions to raise up to $30 million each year through khat taxes.
Today, the ministers announced that they would be increasing khat taxes from $2.5 to $4 per kilogram to enable it raise more revenue from khat trade.
Currently, the ministers have put a proposal forth, which they hope to convince the federal and regional governments to adopt as soon as possible.
The ministers made this announcement during a two-day meeting.
Khat, whose prices can increase from the current rate of $20 a kilo to $100 when supplies diminish, has been banned in Somalia since COVID-19 was first reported in the country.
Nevertheless, in 2019, the government earned $13.4 million from taxes imposed on khat trade.
Before the planned increase, the government had projected that it would add about $14 million to last year’s figure.
COVID-19 has made it impossible for the government to achieve its initial projections, though.
The decision to increase khat taxes is likely to be received with shock, especially from traders in Kenya, where Somalia gets most of its supply.