OPERATIONAL COSTS

KAM decries multiple national and county taxes

They include levies on agricultural produces and permits and licenses to operate.

In Summary

•The pandemic has worsened the situation, KAM says, with businesses struggling with cashflow challenges.

•During his recent 'State of the Nation' address,President Uhuru Kenyatta said the government was considering a country-wide waiver of single business permits and presumptive tax requirement for new businesses.

Crate of tomatoes on sale
EXPENSIVE: Crate of tomatoes on sale
Image: FILE

Multiple levies and taxes by national and county governments are hurting businesses already reeling from effects of Covid-19, the Kenya Association of Manufacturers(KAM) has said.

These include charges on agricultural produce headed to factories, mainly in Nairobi and supply of manufacturers goods across the country, where industry players have to pay in the inter-county movements.

Nairobi is among counties that are making doing business hard, the manufacturers' lobby group has said, citing the  Nairobi City County Finance Bill, 2020.

 

The bill proposes a raft of levies to enable the county government reach its revenue targets for the financial year ending June 2021.

They include charging offloading fee for various agricultural produce, including tomatoes, flowers, macadamia nuts, French beans and avocado.

There is also a proposals to impose charges on transporting construction materials which vary for various materials depending on their weight.

Business premises including cafes, bars, chemists and shops are also targeted with a number of levies based on size and hazardous and non-hazardous waste management, for both homes and businesses.

“ The new proposals are set to cause additional strain to an already grim situation in the aftermath of the pandemic,” KAM chief executive Phyllis Wakiaga said in a statement.

With majority of factories located in Nairobi, the supply chain has also been hit by numerous taxes with counties charging every consignment originating or passing through their jurisdictions.

“People are paying county fees from the source, right up to when it reaches the factory. This, coupled with the high cost of production, that is, high cost of inputs, traditional growing techniques, broker fees, and high transport costs are making products more expensive,” Wakiaga said.

 

The costs are forcing farmers to increase the price of their produce, without necessarily adding value to it, hence making products less competitive in the local and regional markets, KAM notes.

Wakiaga noted that the business environment has been worsened by Covid-19 that has seen entities

Before the coronavirus broke out, businesses were struggling under the weight of increased cost of operation brought on by various permits and licenses.

The pandemic has worsened the situation with businesses struggling with cashflow challenges.

“Imposing additional costs on them might force them to completely shut down and go out of business, leading to loss of jobs, and sources of revenue for government,” said Wakiaga.

The private sector has also been pushing for the merger of several business permits and licenses by the national and county governments, which they say remains a burden to traders.

During his recent 'State of the Nation' address,President Uhuru Kenyatta said the government was considering a country-wide waiver of single business permits for all new businesses as it seeks to ease the cost of doing business in Kenya.

Presumptive tax requirement for all new businesses would also be waived.

These two initiatives and others within our Ease of Doing Programme will now be aggressively rolled-out nationwide, as we endeavor to make it even easier for both local and international investors to set-up, operate and expand their businesses,” Uhuru said.

He said the government's endeavor is to make Kenya the best country on the continent in Doing Business by the year 2022.

KAM yesterday said if properly implemented, the initiative, albeit a little, will improve the ease doing business in the country.

“County governments should work towards implementing the Unified Single Business Permit, to streamline their revenue collection streams and make it less cumbersome for businesses to pay the fees,” Wakiaga said.

Additionally, they should have a one-stop online platform noting that currently, businesses are struggling under the weight of paying for the different business permits and the cumbersome processes involved.

The cost of obtaining each and every one of them remains high and the processes are painfully bureaucratic, which hinders them from expanding,” she said.