Representatives of the business community across various sectors on Wednesday, September 2021 tore into the Kenya Revenue Authority (KRA) in a public participation forum on Wednesday, September 21.
Accessible online, the forum on annual inflation adjustment taxes was attended by representatives of groups including bars and restaurants, alcohol manufacturers, oil distributors, manufacturing lobby groups, beverage manufacturers, and professional services including auditors and accountants. A majority of comments shared online during the forum also took on KRA for various reasons.
KRA Head of Public Policy, Maurice Oray, was however quick to remind attendees of the need to ensure taxes are paid: “All views will be taken into account but even if taxes were increased last year, they will need to be increased this year too because the government must be funded.”
Many speakers generally argued that businesses already worried about their dwindling revenues due to erosion of Kenyans’ spending power due to the record-high prices of fuel and food as well as the lingering impact of Covid-19 on the economy and a weakening Shilling were being forced to shoulder the additional weight of an unpredictable, relentless tax regime.
Michael Wachinga of PwC cautioned that the trajectory if unchecked would cause manufacturers to ‘scale down, cut operations and reduce workers’.
Henry Kabogo, representing water bottle, noted that compliance had become way too expensive for many in the industry and blamed high taxes for job losses, stating: “Tax people in a friendly manner. Kenyans don’t like bottled water, they buy it because it’s essential. 50% of the water market is illicit due to high taxes. If lowered they’d be more compliant to taxes.”
Wanjiku Manyara of the Petroleum Institute of East Africa accused KRA of lack of consultation, stating: “KRA did not engage affected players before deciding to raise taxes and has been ignoring advice.” She called for alternatives routes to raising taxes to be taken including eliminating wastage and expanding the tax base.
Hillary Onami of ICPAK opposed the inflation adjustment taxes citing the precarious economic state of the country.
“Timing for inflation adjustment taxes is off. KRA should allow the economy to rebound first,” he stated.
Coca Cola’s Susan Maingi warned that continued taxation hikes would erode investor confidence in the country, noting: “Juice prices have increased 56% but revenues from juices is only 4%. KRA should widen the tax bracket by growing industries and getting tax from that. Predictable taxes is essential to investments in Kenya. Kenya’s GDP will shrink if taxes increase.”
Zach Munyi of EABL reiterated the calls for a predicable tax environment, highlighting the raft of challenges businesses were facing: “Manufacturers are not averse to paying taxes, they just want to pay taxes in a sustainable manner. Taxes need predictable tax environment. KRA & Treasury have been raising taxes randomly. Firms face high cost of inputs, Forex volatility and high fuel cost.”
Representatives of both the Pubs and Restaurants Association of Kenya (Perak) and Alcohol Beverages Association of Kenya (ABAK) cautioned that the increase in taxes on the sector would drive an increase in the consumption of dangerous illicit brews.
“Things are bad on the ground with sales at COVID levels. Lower disposable income and high price sensitivity have led to lots of (business) closures and huge losses,” noted Perak chairman Michael Muthami who further highlighted various expensive levies paid by bars and restaurants to county governments.