Audit firm Ernst&Young Kenya wants the National Treasury to restructure Kenya’s tax regime in order to collect more taxes and reviving the economy.
The firm says that a reviewed tax regime will increase revenue and attract new investments for a struggling economy whose estimated cost is expected to be slightly higher than Sh3 trillion.
“The government would collect much more taxes by moving away from academic solutions to practical ways that have worked elsewhere,”Hadijjah Nannyomo a tax partner at EY Kenya said yesterday.
She said a change in taxation from the old ways of doing things will enable Treasury fund the Big Four agenda, Covid19 vaccination campaigns and other political plans such as the referendum associated with the BBI.
EY is also asking treasury to partner with the private sector under the Private Public Partnerships [PPPs] as a way of attracting new funding of infrastructure, health and energy projects.
“Partnering with the private sector through special purpose vehicles will allow government to extract much more benefits going forward,” said Nannyomo at a virtual pre-budget media briefing.
The firm said Kenya's GDP is expected to slow down due to the Covid-19 pandemic and that any efforts to revive the economy must be anchored on the critical areas of restructuring the tax regime, triggering growth in agriculture and manufacturing sub sectors.
Kenya’s economy has been adversely affected by the Covid -19 pandemic but with the partial reopening of the economy, there were signs of recovery.
However the gains may be reversed due to the raising infections which have seen some counties go into lockdown.
According to Ernst and Young, management of the pandemic within Kenya to reduce infection rates is key for economic rebound.
This call for a restructured tax regime is similar to one by the tax experts at the Institute of Public Finance who said there is need for a predictable tax regime to foster economic growth and mitigate the looming external debt default situation.
