Lobby warns MPs against rejecting committee’s tax proposals
By Herald Aloo, May 27, 2022
More than three out of four Kenyans are likely to buy illicit goods if Parliament fails to pass recommendations of the Finance Committee that overturned the National Treasury’s proposals to increase taxes on excisable commodities.
Stop Crime Kenya (StoCK), a lobby group working to raise awareness of illegal syndicates conducted the survey to assess consumers’ reaction to the Finance Bill and how the proposed tax increases are likely to affect their interaction with illicit trade.
Many hard-up consumers are expected to seek cheaper, substandard and unregulated products on the illicit market, intensifying the pressure on legitimate businesses and depriving the State of revenue.
“Tax hikes threaten to drive increasing numbers of honest, hard-working Kenyans to the illegal sector in search of more affordable goods,” said StoCKchairman Stephen Mutoro.
In so doing, he added, citizens are put at risk from substandard and unregulated products, while criminals get rich and the Treasury is deprived of much-needed revenue.
SToCK says that more than 55 per cent of respondents believe that tax increases will push them to counterfeits goods, with another 20.8 per cent conceding that they are already buying tax-evading products.
Another 60.8 per cent have linked the proposals to the government’s failure to stop criminals in illicit trade from stealing Sh419 million in tax revenue every day. Tax revenues National Treasury is banking on raising Sh51.6 billion in tax revenues to bridge the hole in the Sh3.3 trillion budget set to commence in July.
But to the Treasury’s shock, the Finance team recommended turning down proposals to increase tax on beer, wine and gaming, a sector that is battling rife counterfeits due to high prices induced by excise duty.
Chaired by Gladys Wanga, the legislators noted that approving the proposals would have effectively left the common man to bear responsibility for the increased costs, leaving the Treasury at the crossroad on the next alternative to seal the budget void left.
“Increasing the price of beer will encourage the consumption of illicit brews and also reduce tax collection by the government,” she said.