Africa-Press – Kenya. Employers have expressed concerns over the approach the government has taken to generate more revenue by proposing new taxes in the Finance Bill, 2023.
The Federation of Kenya Employers notes that the bill will have significant implications for employers and businesses across the country that could result in business closures, job losses and a slowdown in economic growth.
FKE Executive Director Jaqueline Mugo said the proposals, if adapted, will pose a huge burden on tax payers especially those with multiple transactions.
Employers who are already overburdened, she said, will have to remit withholding VAT within three days and withholding tax within 24 hours as opposed to the previous remittance on the 20th day of the month following the month in which deductions were made.
This, she said, will cause a strain in the form of job markets which has seen the number of new job opportunities drop from 444,046 in June 2023 to 333,502 in December 2023.
“This trend is likely to continue if the Government does not provide a stable, predictable and less costly operating environment”.
Mugo accused the government of introducing the new proposals without proper consultation.
The Executive Director asked the government to give businesses adequate time to adjust their budgets before policies are introduced in the labour sector.
“As the voice of employers, we urge the government to consider the impact of the proposed tax hikes on employers, employees and our nation as a whole,” she said.
Mugo said changes to the tax treatment of certain employee benefits such as pension and medical insurance among others will cause employers to review their financial strategies and salary structures and make necessary adjustments to ensure compliance with the new rules.
“As a result, we will have very demoralised employees, yet an employer is investing heavily in them. This bill will impoverish Kenyans, leaving the worker with no income to grow capital for investment”.
The proposed increase of excise duty, the CEO said, will lead to influx of cheap counterfeit imports into the country, hampering growth of our local manufacturers.
Mugo further stated that the bill limits tax payers’ right to fair hearing and gags the court.
“No production of new evidence removes the tribunals, high court or court of appeals’ discretion to allow the appellant taxpayer to rely on new grounds of appeal. This is poor jurisprudence and constitutes unfairness.”
Mugo further said the proposed development levy may lead to an increase in prices of goods and services and have an adverse impact on businesses pushing them into financial difficulties.
She said employers continue to bear the brunt of tough economic environment as businesses struggle with many of them either closing shop or on the verge of closing shop due to the current tax environment.
The Federation further urged the government to grow the national cake, cut its own spending and find a fair balance as they cannot tax themselves to prosperity. This is not a viable strategy, they said.
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