35,000 People To Lose Jobs Immediately After Inflation Tax

Kenya’s unemployment rate is at its worst. Stats show that the rate currently stands way above 37 percent. With thousands entering the job market annually, the unemployment menace is only headed to the worst in history and something needs to be done.

The Small and Medium Enterprises (SMEs) that were the only hope for the millions of Kenyan unemployed youth aren’t doing any better. 450,000 of them are shutting down annually, 30,000 monthly, and 1,000 daily. With the pandemic, the numbers are beyond measure.

Related Content: Tax Matters: How Much Has The Government Collected So Far?

With this in mind, one would expect the government, led by the Kenya Revenue Authority to be kind and lenient in terms of the taxes that they impose on businesses and individuals. No country has ever prospered through the over-taxation of its population.

With the implementation of the inflation adjustment tax, manufacturers are estimating that Kenya will lose over 35,000 jobs and billions in taxes if the Kenya Revenue Authority (KRA) implements the 6.3 percent inflation adjustment on excise duty.

According to the Kenya Association of Manufacturers (KAM), industries will cut their workforce, terminate supply contracts, and reduce remitted taxes if consumption declines as a result of higher prices.

Related Content: Kenyans To Pay KRA Ksh142 For Two Beer Bottles From October

KAM says sales have declined due to excise tax increases on spirits and beer in July that have hit barley and sorghum-based beer sales by 21 percent and 32 percent respectively to Covid-19 pandemic levels in just a month and a further increase will lead to a collapse as consumers turn to illicit alcohol.

“Finished goods distribution and retail trade (dominated by MSMEs) will lose Sh4.2 billion in reduction of raw material use, Sh15.7 billion in employment income loss and 35,364 jobs will be lost,” KAM said.

For every two beer bottles, Kenyans will pay the taxman 142.4 shillings up from 134 shillings. KRA will collect up to 4.06 shillings for filtered cigarettes up from 3.82 shillings.

Meanwhile, the price of a bottle of water will go up from 6.6 shillings per liter to 7.02 shillings while juice sellers will give KRA 14.14 shillings for every 12 liters up from 13.3 shillings.