Industry recommends Taskforce to advise on tax policies

Forum on implications of the Finance Act, 2018 to manufacturing sector held

Kenya Association of Manufacturers (KAM) has today recommended the formation of an industry-led multi stakeholder Taskforce that will advise on people-driven public expenditure, debt and taxation policies, and long term industrial measures to drive competitiveness for the manufacturing sector.

The government, through the Finance Act, 2018 introduced new tax measures aimed at increasing its revenue collection, including the 8% VAT on fuel, excise duty on fees charged for money transfer services, excise tax on sugar confectionery, anti-adulteration levy on all illuminating kerosene among others.

Speaking during a forum on the implications of the Finance Act, 2018 to the Manufacturing Sector, KAM Vice Chairman, Mr Mucai Kunyiha noted it is important that we develop national conducive fiscal policies aimed at driving the competitiveness of industry at both local and global markets.

The new tax measures do not sync with the spirit of the Big 4 Agenda. An increase in the cost of doing business renders the local environment hostile to investments and derails any growth prospects of existing projects and planned expansions.

It is crucial that the Government involves all relevant stakeholders in the development of policies that will have an impact on the economy and to institute strong measures to ensure transparency of public affairs, including debt management, to avoid a recurrence of the current situation,” added Mr Kunyiha.

Also recommended was the need to develop clear cut strategies to provide linkages between National and County Government budgets in order to create the necessary synergies between the two levels.

Counties are an integral part of the public financial system in Kenya. They are important agents for creating a broad-based economy to reduce economic inequality in Kenya. They need support to develop their nascent Public Financial Management systems. The debate on the state of public finance and the economy has not adequately included the role of the counties,” added Mr. Kunyiha.

The Forum reviewed the strengths and weaknesses in the Finance Act 2018 and Kenya’s proposal to the East African Community reflected in the EAC Common External Tariff of the Community to promote manufacturing.

The forum brought together manufacturers, tax advisory firms including PricewaterhouseCoopers (PWC) and Ernst & Young (EY), public policy influencers such as Institute of Economic Affairs (IEA), and Kenya Bankers Association (KBA).

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