KRA Plans To Raise Taxes And Levies Amid Covid-19 Is Set to Hurt Businesses

The coming of Covid-19 has affected virtually every sector in Kenya. Thousands of businesses have shut down after it became difficult for them to remain afloat and thousands of others had to cut down on their operations.

Millions of Kenyans have already lost their jobs as companies cut down on the workforce to secure cash and to enable them to sail through the pandemic. According to the Ministry of Labor and Social Protection data, shared with FKE, 604 companies countrywide have declared their employees redundant following the negative effects of COVID -19 on businesses.

The Federation of Kenya Employers (FKE) said that every modern sector company in Kenya has lost at least 33 jobs on average due to the impacts of the Covid-19 pandemic. It is evident that Covid-19 has hit both companies and individuals hard. Kenyans are struggling to sail through the pandemic with little hope of seeing a better tomorrow.

As the pandemic continues to sweep across the globe, businesses and individuals are hopeful of a recovery, especially after the reopening of the economy and the lifting of some movement restrictions that had been put in place.

President Uhuru Kenyatta, during his address to the nation, assured businesses and investors that the government was going to support them in making sure that they recover as soon as possible so that the economy and jobs are shielded against any extreme shocks.

With the assurance from the Head of State, it was never thought that Kenya Revenue Authority (KRA) will come up, less than a month later, to announce plans to increase taxes and levies on some selected items and sectors that will eventually affect the common man; the consumer.

In a notice to the public and stakeholders, the KRA said: “‘Kenya Revenue Authority would therefore like to inform manufacturers and importers of excisable goods falling under the above category and members of the public that the Commissioner-General will adjust the rates of excise duty using the average inflation rate for the financial year 2019/2020, as determined by the Kenya National Bureau of Statistics. The adjusted rates will be effective from 1st October 2020.”

The move by KRA, if effected, will push up prices for alcohol, cigarette, petrol, soft drinks, and bottled water. This will in turn affect many businesses in the sectors. This also means businesses will be forced to transfer the cost to consumers while at the same time putting in place other strict measures as laying off more employees to remain afloat.

Several stakeholders have already opposed the move. Kenya Association of Manufacturers says the move will negatively impact on the manufacturing sector.  “KRA should not implement the proposed inflationary adjustment rate from 1st October 2020 until after Kenya is declared the pandemic free and full recovery of excisable goods manufacturers achieved,” KAM chief executive Phyllis Wakiaga wrote in a letter to KRA Commissioner-General Githii Mburu.

There is a need for the Kenya Revenue Authority to approach this matter with the reality of what is happening on the ground. They should listen to other voices of reason in the sector and have an avenue that will encourage the manufacturing sector to grow.