Budget proposals must cushion citizens, manufacturers say

Manufacturers have today termed some proposals in the Finance Bill 2022, punitive, saying they focus on increasing revenue at the cost of citizens’ welfare. 

This was during the Finance Bill 2022 Webinar, hosted by Kenya Association of Manufacturers (KAM) in partnership with Ernst and Young (EY). 

KAM Chairman, Mucai Kunyiha noted that whereas the budget has been developed in difficult times due to the effects of the COVID-19 pandemic, upcoming general elections and supply chain disruptions attributed to Russia-Ukraine war, it fails to cushion citizens from the prevailing situation in the country. 

“At the heart of good public finance management, prudent expenditure and a nation’s prosperity is a well-planned budget. Therefore, it is imperative that government develops the budget while remaining cognizant of the need to cushion the economy from shocks arising from the prevailing conditions. Government needs to prioritize resilience, in the budget process.” 

Mr Kunyiha also called for the prioritization of export-led economic prosperity, driven by manufacturing, saying, “Currently, Kenya represents only 1 percent of the global economy. We must urgently focus on increasing our productivity and competitiveness and finding markets for our products as a country. This will enable us to take advantage of various opportunities presented by trade agreements such as the Africa Continental Free Trade Area (AfCFTA) among others. ” 

Director for Private Sector Development, Ministry of Industrialization, Trade and Enterprise Development, Mr Stephen Odua, noted that the national budget focused on priority issues affecting citizens. 

“If implemented, the budget proposals shall ensure continuity towards the achievement of the Big Four Agenda. For instance, the allocation of funds to the Affordable Healthcare pillar shall cushion us from COVID-19, since we are not out of the woods yet. On Manufacturing, the Government has enhanced support towards the completion of ongoing developments of Special Economic Zones (SEZs), which we consider to be a game-changer in attracting investments to the country. The budget allocated for manufacturing shall go towards completing ongoing SEZ projects across the country, as well as driving SME development.” 

EY Senior Manager, International Tax & Transactions Advisory Robert Maina, noted that the Finance Bill 2022 focused on raising revenue for Government, “The Bill seeks to increase the digital service tax rate from 1.5% – 3% of the gross turnover, to enhance revenue collections from the rapidly expanding digital market space. It also proposes to increase excise tax on various commodities, demonstrating Government’s urge to raise revenue collection, at the expense of mwananchi.” 

The webinar sought to highlight the implications of the Finance Bill on the manufacturing sector. The Bill proposes tax and administrative changes to several laws including Income Tax Act, Value Added Tax, Tax appeals tribunal, Excise duty, Tax Procedures Act, Miscellaneous Fees and Levies Act, Kenya Revenue Authority, Evidence Act, Capital Markets Act, Insurance Act, Unclaimed Financial Markets Act and the Statutory Instruments Act. 

The Association shall be engaging the government on the ‘punitive’ tax measures highlighted in the Finance Bill in a bid to promote the competitiveness of the manufacturing sector in Kenya.