Manufacturers have been complaining over unplanned tax changes by the government, which have forced some of them to close shop in Kenya, only to set up operations in other countries in the region.
According to Stanbic Bank East Africa economist Jibran Qureishi, who interviews manufacturers to gauge the health of the private sector, the industrialists say they want the business environment to remain predictable, meaning that policy and lawmakers need to ensure that they do not shift taxation goalposts without sufficient consultation.
While the government needs to collect revenues to support its budget and provide services, businesses need the taxation regime to be predictable. This behooves the legislature to ensure that laws and policies keep the tax obligations for businesses predictable.
The government should also address efficiency bottlenecks that make it fall short on mobilising revenues, such as the numerous tax exemptions offered by the Treasury.
It also has to adopt strategies and laws that enable it to widen the tax base and at the same time attract and keep investments in the country. Revision of the tax system should balance all considerations of government and businesses. Indeed, investors are often more willing to accept taxes as long as the investment environment remains sound and predictable.
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