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Experts have suggested that the government should investigate tax waivers and demand full payment for those that were erroneously granted in order to increase income.
PKF, a tax advisory firm says the National Treasury has lost a lot of money from tax exceptions some of which were done irregularly.
They have argued that if a review is done, and the firms made to pay their share of taxes, it will ease pressure to tax Kenyans more.
PKF’s Senior Tax Manager James Mulili, said with the proposed increase in income tax, NSSF and NHIF contributions, the proposed housing levy and the continued inflationary pressures on basic essentials, the common mwananchi’s spending power continues to be eroded.
“Government should consider shelving the introduction of mandatory contributions to the National Housing Fund as it will lead to reduced disposable incomes, but instead, the government should provide a conducive environment for the private sector to invest in construction of affordable houses,” said Mulili.
PKF said the implementation of all the taxes; contributions and levies at once coupled with inflation will be a big burden to consumers.
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Mulili said the government should put in place tax measures that will lead to increased disposable income to the citizens.
“This can be through undertaking the projects through the Public-Private Partnerships (PPP) model, lowering the corporate tax rate for companies engaging in affordable houses to 10 percent from the current 15 percent and exempting these companies from the provisions of interest and foreign exchange restriction to encourage foreign investors in the sector,” added Mulili.
PKF stated that only about half of the registered taxpayers meet their tax obligations.
This has seen the tax base in Kenya remain narrow, leaving only a few to shoulder the burden.
The experts said expansion of the tax base would promote equity and fairness in the tax system.
PKF however said there remains a large informal sector that has remained hard to tax and therefore not contributing to the national tax basket.
“The government should instead consider efforts to bring more taxpayers into the ToT bracket, as a simplified form of taxation,” said PKF CEO Alpesh Vadher.