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Businesses decry heavy taxation amidst pandemic

The Kenyan Business Community has decried the high cost of doing business, amidst the economic challenges brought about by Covid-19 pandemic.  

At a meeting themed ‘Reduce Cost of Living’, the business community expressed concerns on the current focus on politics in the country at the expense of discussing practical solutions to bring local businesses back on the recovery track.  

Speaking at the meeting, Kenya Association of Manufacturers (KAM) Chairman, Mr Mucai Kunyiha, regretted the severity of the additional taxes imposed on businesses in addition to inflation adjustment on specific rates on duty tax. 

“It is becoming more expensive to operate in Kenya due to the introduction of taxes, fees, levies and charges. For instance, the Crop (Nuts and Oil Crops) Regulations 2020 introduced new fees and levies as a measure to control thirteen (13) scheduled crops,” he lamented. 

Kunyiha said the introduction of excise tax on raw materials and 16 percent Value Added Tax on the supply of some products through the 2021 Finance Act has increased the cost of doing business and final consumer prices. 

“In addition, the government has also proposed a 4.97 percent inflation adjustment on specific rates of duty, which is set to have an impact on consumers and manufacturers and negate gains made in the fight against illicit trade,” explained Kunyiha

The Chairman said the introduction of such measures was counterproductive and had serious consequences across all sectors of the economy.  

He said the new tax measures are harsh to the local businesses that are on the recovery track, adding that the unpredictable fiscal and regulatory policies significantly threaten the ‘Made in Kenya’ goal and give an upper hand to cheaper imports from other countries. 

Institute of Economic Affairs (IEA) Chief Executive Officer, Kwame Owino, reiterated the importance of a thriving private sector, noting that if private sector growth fails, the economic development shall remain stunted. 

He said Africa needs to focus on long-term prosperity, as opposed to short term ambitious revenue collection targets, saying that there was need for the country to stop gauging Kenya revenue authority’s performance and efficiency, based on record-breaking rates of tax collection.  

On his part Micro, Small and Medium Enterprises (MSME) Alliance of Kenya Chief Executive Officer, Mr Samuel Karanja called on the government to do away with archaic regulations that hinder Small and Medium Enterprises growth.

 “Currently, we have 7.4 million Micro, Small and Medium Enterprises (MSMEs) in Kenya, but only 1.56 million are licensed. We urgently need to formalize the cottage industries,” said Karanja and urged the government to increase MSMEs competitiveness and productivity through informed and effective policies.

Phyllis Wakiaga Chief Executive Officer Kenya Association Manufacturers (KAM) addressing the media at the Sarova Stanley Hotel in Nairobi on the high cost of basic consumer commodities
The County
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