NAIROBI, (Xinhua) --
Kenyan investors on Monday decried the new tax
measures on fuel that will take effect on Sept. 1, saying it
will have a major impact on the economy as it will hold up
investments and business and urged the government to review it.
The investors under
the Kenya Private Sector Alliance (KEPSA) said the government’s
plans to impose a 16 percent VAT on price of fuel will result in
an increase in inflation rate by over 4 percent.
It said the
projected rise in pump prices will result in an increase in the
cost of production and manufacturing of commodities by both
small and big businesses, an increase in cost of transport and
an increase in cost of household consumption of goods and
The tax measure are
on the back of a push by the International Monetary Fund (IMF)
to enable the governments raise more revenue to curb mounting
debt following increased domestic and external borrowing.
The measure was
among the conditions given to Kenya by IMF in 2015 when it
offered the East African 1.5 billion U.S. dollars standby loan.
“In our opinion, the
increase in cost of doing business will not only impact the
local investors but also render our economy uncompetitive and
repel investors who would invest directly in our economy
including the Big Four opportunities,” KEPSA said.
The investors urged
the government to reconsider the proposal to charge VAT on fuel,
and instead consider pro-business strategies that strike a
structural fiscal balance, address the inefficiencies with tax
collections systems, and increase the tax bracket to avoid tax
fatigue by a few tax payers.