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Stop theory and offer real solutions, politicians told

 

Manufacturers have cautioned presidential aspirants against propagating “theoretical economic plans” while ignoring the real issues Kenyans and businesses face.

While unfavourable government policies have killed many businesses, stagnated job creation and constrained productivity, they said, aspirants for top national and county seats are not addressing these problems.

Speaking Tuesday at the launch of the Kenya Association of Manufacturers (KAM) Manufacturing Manifesto 2022-2027, they demanded that politicians explain to Kenyans how they will address issues such as multiple taxation, a complex regulatory environment that is driving investors away, growing Kenya’s exports, and reducing budget deficits and the public debt.

“It is disconcerting that political leaders are more focused on grand theoretical economic plans as opposed to practical solutions to issues, which can quickly be actualised through predictability and political goodwill and have a much larger impact on all citizens beyond 2022,” said KAM chief executive Phyllis Wakiaga.

Unstable tax environment

KAM wants politicians to address the unpredictable and unstable tax environment where citizens and businesses are charged too many taxes, raising the cost of living and hurting productivity and the competitiveness of Kenyan products.

“One of our biggest challenges is that every organisation being set up wants a fee or a levy on top of what the counties and national government demand,” said KAM chairman Mucai Kunyiha.

“Sectors like food and beverage are paying for over 40 licences because everybody wants to issue a different licence for a different thing.”

To make the taxation regime stable so that citizens and businesses know what they are expected to pay, KAM proposes “three-year tax schemes”.

“Almost every year … in Parliament … there is a new idea on taxing something new. A stable tax policy will allow businesses to prepare and adjust when there are new taxes,” Mr Kunyiha said.

Cut regulations by half

With eight of the manufacturing sector’s 11 sub-sectors paying between 19 and 41 charges to different government agencies, KAM also wants the incoming government to cut regulations by half, to reduce the burden on businesses and improve the ease of doing business.

“We need to be clear about why we are taxing raw materials and inputs because there is a lot of inputs where we are getting many new taxes and charges all the time and they are hindering manufacturing,” he said.

While the high cost of living can be partly blamed on the global impacts of the Covid-19 pandemic and other global market trends, he said, poor government policies are also a culprit.

Budget deficits that have led to a growing public debt, KAM said, are costing citizens and businesses dearly, because they are asked to pay higher taxes.

“There is a huge part of our cost of living that is related to how we are running our country and it’s an issue that needs to be addressed,” Mr Kunyiha said.

“We can always decide if we want to remain an agrarian society and just be farmers, but since we decided that we want to become a middle-income country, then we must industrialise.”

Manufacturing

Though manufacturing is on the government’s Big Four agenda, KAM argued, it has contracted from 9.3 per cent of GDP in 2018 to 7.6 per cent by 2021, with less than 14,000 jobs created between 2016 and 2019, just 10 per cent of formal employment. Manufacturers largely blame the tax and regulatory environment that they say is a disincentive.

“Only six per cent of manufacturing firms export and most of them say it’s because it’s too much (of a hassle), getting VAT refunds is difficult, (with) KRA locking their trailers,” KAM said.

Presidential aspirants, the association said, should explain how they will grow the sector to produce half of Kenya’s exports from the current 28 per cent.

“We urge political aspirants to prioritise creating an enabling business environment to attract both local and foreign investors to Kenya,” said KAM trade and tax committee chair Bharat Shah.      BY DAILY NATION    

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