Zachary Ochuodho @zachuodho
The Kenya National Chambers of Commerce and Industry (KNCCI) has recommended a raft of measures that the government needs to take to contain the level of debt and improve the balance of payments.
KNCCI has asked the government to expand the tax base, curb losses to corruption, improve public transport network and service delivery and also support local industries to enhance competitiveness.
An audit of government spending by heeding the directives of the Auditor General and making changes to spending based on independent reviews of government spending, according to the body, will help improve balance of payments.
KNCCI national chairman Kiprono Kittony said the move to levy value added tax on petroleum products was a condition by the International Monetary Fund (IMF) in exchange for a standby credit facility that would allow emergency borrowing in the event of economic shocks.
“VAT on petroleum products is expected to raise Sh71 billion in tax thereby containing the level of debt and improve the balance of payments. However, it will definitely affect the country’s dream to achieve 15 per cent growth in the manufacturing sector,” said Kittony. He said an increase in the cost of petrol would lead to an increase in inflation due to rise in production and transportation costs.
Kittony said while businesses can claim the tax as input tax, the chamber is also concerned with the pace with which the Kenya Revenue Authority has refunded VAT in the past.