Give tax breaks to regain exports market — KAM
3 weeks ago, 00:17
Manufacturers now want a break from the import declaration fee of two per cent and the railway development levy of 1.5 per cent.
Speaking during the unveiling of the sectors deep-dive report on Thursday evening, Kenya Association of Manufactures chairman Sachen Gudka said the move will help them regain some of the lost export market in the region.
He said the sector is worried about the decreasing optional spending from consumers due to higher taxation that has led to a decrease in the demand for goods.
“While there is an imperative by the government to collect tax, we are worried that we have reached a tipping point of overtaxing consumers and the spending will go down,” Gudka said.
“The government should release the taxes as rebate to all exporters in order for us to have a competitive advantage.”
He noted that in recent years Uganda's exports to Kenya surpassed Kenya's export to Uganda, same to exports from Tanzania, hence the need for Kenya to evaluate its competitive position.
The 2018 Economic survey shows the value of Kenya's imports from Uganda more than doubled from Sh19.3 billion in 2016 to Sh42 billion in 2017 while its exports to the same country reduced in value from Sh62.2 billion to Sh61.8 billion.
Exports to Tanzania fell to Sh28.5 billion from Sh34.8 billion in 2016 as recorded in the survey while exports from Rwanda plummeted to Sh17.1 billion from Sh17.5 billion.
According to the Kenya National Bureau of Statistics leading economic indicators for August 2018, the value of exports to Tanzania currently stand at Sh16.42 billion, Uganda at Sh33.81 billion while exports to Rwanda cost Sh10 billion.
On average, Kenya's imports from Africa recorded a 43 per cent increase from 2016 to 2017, accounting for 11.6 per cent or Sh200.5billion of the total import bill.
On the flip side,exports to Africa continued on a downward trend for the second year to Sh223.9 billion accounting for only Sh37.7 per cent of the total earnings during the year.
Alongside zero rating the import declaration fee and the railway development fee, the manufactures also want the introduction of preferential foreign exchange premium.
Other proposals include processing and payments of VAT refunds in 60 days and implementation of the trade remedies Act of 2017 which seeks to deal with unfair trade practices.
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