Policy must cushion, not hamper business
On the back of pandemic shocks, policy makers must prop the private sector to engineer economic turn-around by allowing players to remain profitable, otherwise the taxman will suffer.
Going by concerns raised by manufacturers in a Covid-19 report on mitigating effects of the virus, one starts to understand why sector players lament that they are caught between a rock and a hard place.
For instance, manufacturers wonder why government is trying hard to tax its productive sector when all they need is a stimulus package.
The sector, which is facing low demand for goods amid cash flow constraints, must now deal with a raft of new taxes on the one hand and high cost of doing business on the other.
To service Kenya’s ambitious Sh3.6 trillion budget, most of the taxes will come from this sector, hence the need to give it space to recover and flourish.
More than ever before, policy makers must avoid pilling pressure on the sector.
They should instead consider ways of dealing with the high cost of doing business including expensive power and levies that have made manufacturing costly.
Already, a number of companies have closed shop while others migrated to other countries.
Therefore, as businesses deal with the apparent new normal, policy makers at both the national and county governments must think twice before proposing new levies.
In expanding the tax base, the Kenya Revenue Authority recently reported that more than 5.5 million taxpayers filed their tax returns, reflecting a 19 per cent growth from last year.
This as the number of taxpayers using iTax has grown over the past few years, rising from 3.6 million in 2019 to 4.4 million in 2020 and this year’s 5.5 million.
However, this growth can only bear fruit if legitimate small scale traders targeted by the taxman are helped to grow.
For example, it does not make economic sense to demolish shops at night without warning, as was witnessed at the weekend in parts of Nairobi’s Eastlands.
Traders who lost millions of shillings to looters and demolition squads were tenants who had a right to be informed if they had rented land which had infringed the rights of other stakeholders.
A country leveraging the kadogo economy for growth must find ways to cushion small traders and provide them with the right environment.
