Economy

Employers say new tax measures will lead to job losses

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FKE president Habil Olaka. FILE PHOTO | NMG

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Summary

  • Employers have faulted the recent taxation measures saying it will lead to job losses and impact negatively on businesses.
  • The Kenya Federation of Employers (FKE) says the new taxes will have farreaching negative effects on the cost of doing business, especially coming at a time when the country is battling with the effects of Covid-19.
  • The axes that took effect in July have made bank loans, Internet access and mobile phone calls costlier.

Employers have faulted the recent taxation measures saying it will lead to job losses and impact negatively on businesses.

The Kenya Federation of Employers (FKE) says the new taxes will have farreaching negative effects on the cost of doing business, especially coming at a time when the country is battling with the effects of Covid-19.

The axes that took effect in July have made bank loans, Internet access and mobile phone calls costlier.

MPs increased excise duty on airtime and data from 15 percent to 20 percent, backed the Treasury’s bid to reintroduce the 16 percent VAT on cooking gas and a 20 percent excise tax on the fees and commissions earned on loans.

Addressing a news conference in Nairobi yesterday, the federation’s national President Habil Olaka said employers require a conducive environment for their enterprises to prosper.

“If the current taxation trend continues, the country should prepare for more job losses and business closures. We need a friendly business environment to support recovery from the effects of Covid-19 pandemic,” said Dr Olaka.

The additional taxes emerged as a majority of households continue to grapple with Covid-19 economic hardships.

Dr Olaka who is also the chief executive of the Kenya Bankers Association (KBA), a lobby for the lenders, had in its presentation to the lawmakers argued that the imposition of excise duty on fees and commissions will raise the cost of borrowing.

The KBA said a higher cost of credit was in turn, likely to affect access to credit at a time businesses and households were looking for cash to recover from the knocks of the Covid-19 pandemic.

The employers argue that the labour market functions well with strengthened social dialogue and engagements and urged the government to promote inclusion, stability, and predictability in the regulatory environment.