State must listen to private sector cries
By Editorial.Team, February 21, 2023The private sector has recently put the government on the spot for being bullish in its bid to collect taxes and other levies, saying the move is eroding efforts to ease the cost of doing business.
This follows a raft of changes to increase revenue as the government works on raising the tax targets to more than double in the next five years to hit Sh6 trillion from Sh2 trillion. Granted, there are elements within the private sector unwilling to pay taxes. However, the increasing tax burden may kill the goose that lays the golden egg.
With every sector grappling with the effects of a global recession, inflation, fluctuating prices of products and high cost of freight, companies are between a rock and a hard place.
Murmurs in the private sector have since morphed into a clear call to the government. Manufacturers have in the past raised several concerns through their lobby, but they came out guns blazing against the government’s plan to increase the cost of Excise Duty stamps over Sh4.5 billion debts, terming it a taxman’s error that should not be transferred to businesses and consumers.
Under the Excise Duty (Amendment) Regulations, 2023, the Kenya Revenue Authority has proposed an upward review of Excise Stamp charges, partly to raise revenues to offset a Sh4.5 billion debt owed to a Swiss contractor, SISCPA.
Through the Alcoholic Beverages Association of Kenya (ABAK), they termed the move unfair and unexpected. The flower sector called out the government over the new National Social Security Fund (NSSF) rates and other unsettling changes.
During these tough economic times, an increase of NSSF rates from Sh200 to Sh2,000 per month would lower their profit margins, on increased recurrent expenditure. This could trigger rampant industrial actions, job losses and reduced share of the local and foreign markets.
Floriculture, for example, employs in excess of 200,000 Kenyans directly, and a million in supply of goods and services. Any adverse impact will affect over four million livelihoods.
Also, growers on average pay up to 45 levies to the national and county governments.
The most worrying change, however, is the increased levy by the Water Resources Authority (Wasreb), most likely leading to even higher electricity bills. Floriculture is a heavy user of water.
With drought affecting most parts of the country, high taxes, unsustainable energy costs, increased cost of accessing inputs, and non-access to VAT refunds, most sectors of the economy will strain to meet their obligations.