Manufacturers are pushing for the removal of import duty on raw materials and a reduction in the number of levies in a bid to lower production costs and increase competitiveness of locally-made goods.
The Kenya Association of Manufacturers (KAM) said the government should tax the final product and harmonise taxes to avoid double taxes by national and county governments.
KAM said the proposal will lower production costs of local goods and improve their competitiveness in the global market, boosting job creation and contribution of the sector to the gross domestic product (GDP).
Imported raw materials and semi-processed goods attract a duty of ten percent which KAM says has been a major contributor to the high prices of locally-made goods, making them less competitive in the global market.
“Kenya is increasingly subjecting many raw materials and intermediate goods to taxation thereby harming export competitiveness of our manufacturing firms,” KAM chief executive Officer Phyllis Wakiaga said while launching the second manifesto for the sector to guide debate on key issues facing manufacturers into the election.
“Large firms can afford the cost of compliance with the tax code but small scale manufacturing firms often comply at great costs and loss of efficacy.”
The lobby said there is need for a national tax policy that will reduce the number of taxes at the national and county governments and automate the collection of levies at the devolved units to weed out corruption.
KAM also wants the next government to set up a delivery system dedicated to the manufacturing industry to ensure timely tracking of progress given that the sector is a key plank in Kenya’s job creation agenda.
Manufacturing is one of the four pillars of President Uhuru Kenyatta’s job creation agenda but has been beset by struggles with its contribution to Kenya’s GDP falling in the five years to 2020.
Data from the Kenya National Bureau of Statistics shows that the sector’s contribution to the GDP dropped to 7.6 percent in 2020 from 7.9 per in 2019.
The slump in 2020 was blamed on the Coronavirus outbreak that disrupted local and global supply chains and led to a plunge in local economic activities and ultimately the loss of jobs.