NAIROBI, KENYA, OCTOBER 2 — The government has been challenged to form an industry-led multi stakeholder taskforce that will advise on people-driven public expenditure, debt and taxation policies, and long term industrial measures to drive competitiveness for the manufacturing sector.
This comes as the government moves to implement the Finance Act, 2018 which was signed into law by President Uhuru Kenyatta on September 21, which introduced new taxes on a range of goods and services.
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The government is keen to capitalize on the new tax measures to increase collection.
These includes the eight per cent (8%) VAT on fuel, excise duty on fees charged for money transfer services, excise tax on sugar confectionery, anti-adulteration levy on all illuminating kerosene among others.
Through the Kenya Association of Manufacturers (KAM), industry players have however cautioned that the new taxes will scare away investors as the cost of doing business in the country increases.
KAM has since called for involvement of all appropriate stakeholders to ensure decisions made by the government do not hurt the economy by making Kenya un-competitive.
Speaking during a forum on the implications of the Finance Act, 2018 to the Manufacturing Sector, KAM Vice Chairman Mucai Kunyiha said the country needs to develop conducive national fiscal policies, aimed at driving the competitiveness of industry at both local and global markets.
“The new tax measures do not sync with the spirit of the Big 4 Agenda. An increase in the cost of doing business renders the local environment hostile to investments and derails any growth prospects of existing projects and planned expansions,” Kunyiha said.
“It is crucial that the Government involves all relevant stakeholders in the development of policies that will have an impact on the economy and to institute strong measures to ensure transparency of public affairs, including debt management, to avoid a recurrence of the current situation,” added Kunyiha.
Industry players who met in Nairobi on Tuesday also recommended the need to develop clear cut strategies to provide linkages between National and County Government budgets, in order to create the necessary synergies between the two levels.
“Counties are an integral part of the public financial system in Kenya. They are important agents for creating a broad-based economy to reduce economic inequality in Kenya. They need support to develop their nascent Public Financial Management systems. The debate on the state of public finance and the economy has not adequately included the role of the counties,” Kunyiha said.
The Forum reviewed the strengths and weaknesses in the Finance Act 2018 and Kenya’s proposal to the East African Community reflected in the EAC Common External Tariff of the Community to promote manufacturing.
The forum brought together manufacturers, tax advisory firms including PricewaterhouseCoopers (PWC) and Ernst & Young (EY), public policy influencers such as Institute of Economic Affairs (IEA), and Kenya Bankers Association (KBA).
