Economy

Kidero unveils environment levy for all business owners

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A supermarket attendant packs goods for a customer. Nairobi County plans to to introduce an environment levy on firms that deal with plastic bags such as supermarkets and retailers. FILE PHOTO | NATION MEDIA GROUP

City Hall is set to introduce an environment levy that will see businesses pay up to Sh60,000 annually with the proceeds expected to be used in keeping Nairobi clean.

The charge will be levied on firms that deal with plastic bags such as supermarkets and retailers.

Nairobi County says in its Finance Bill, which has been published for public scrutiny, that other firms will pay a lower charge of Sh2,400 yearly.

The levy comes as the County Assembly prepares to debate a Bill that will require shoppers to pay a fee for using plastic bags to carry goods.

The fee was to be collected by retailers, including small corner shops and grocery stores, on behalf of City Hall, creating an accounting nightmare because most of them do not offer receipts. 

READ: Shoppers in Nairobi to be charged for plastic bags

Nairobi may have settled on a fixed levy to avoid the complications of tracing collections from retailers, especially informal stores.

In countries like Ireland and Hong Kong, the plastic bag is sold to the customer and itemised in the receipt to ensure that the levy is remitted to the government.

But such a system is likely to be abused with small shops and stalls not issuing receipts or employing formal accounting methods, hence the rationale for a flat rate.

It would be expected that the retailers will on their own volition start charging customers for the bags to offset the charge either directly or by loading the cost onto their wares.

The UK, which in June passed a law similar to that in the county assembly, imposed a 5p (Sh7.24) charge for each bag but exempted corner shops to avoid the accounting hurdle. The levy is charged on supermarkets and large stores only and is expected to cut plastic bags use in the UK by up to 75 per cent.

Figures from Wales and Ireland show that taxes have had a dramatic and immediate effect of reducing use of plastics bags by 80 per cent or more, the BBC says.

No penalties have been set out in the Finance Bill for those who fail to pay the levy. In the Plastic Bags Bill, Minority Leader Abdi Hassan had proposed that those found in breach of the law be jailed for a term not exceeding one year or a maximum fine of Sh500,000, or both.