Small traders seek tax cuts for Covid recovery


 Lilian Maru of Leather Masters talks to clients during the second edition of Nation Media Group’s SMEs expo at the Kenyatta International Convention Centre on March 19, 2021.

Photo credit: Dennis Onsongo | Nation Media Group

Small-scale traders have petitioned the government to reduce taxes to help them to survive the Covid-19 pandemic hardships.

Stakeholders at the just concluded annual Nation Media Group SMEs Expo and Conference raised concern that taxation is sinking the fortunes of Small and Medium-sized Enterprises (SMEs).

Traders who make revenues of between Sh1 million and Sh50 million in a year are required to pay a Turnover Tax, which is charged at 1 per cent of the gross sales the business makes each month.

Ms Jane Munyao, the chair of the Association of East African Women Entrepreneurs said high taxes, in addition to the rising cost of crucial business-enabling commodities such as fuel, have derailed many businesses at a time most of them are struggling to attract customers hard hit by the economic fallout.

Ms Munyao is a handicrafts trader based in Mombasa.

Biggest challenge

"The biggest challenge we have had as small businesses over the past year is the taxes and levies that we pay relative to the amount of business that we are carrying out. We know the government has to collect its share of revenue, but should it be at the expense of the survival of small businesses like us?" She posed.

"We all pay for a business permit, but depending on the type of business a small trader is dealing in, for example a food, liquor or medical store, the licences required increase which is hard for many traders," MS Munyao said.

Mr David Mwireri who is based in Laikipia and deals in maize, also sought to have levies charged on businesses reduced to create conducive environment for growth.

"I pay Sh5,500 to the Laikipia County government for my annual business permit, a fee which is not very high. But it is the other taxes to Kenya Revenue Authority which give us a headache. They drive up the cost of doing business," he said.

Economist Tony Watima said the government is faced with a difficult balancing act between collecting funds to finance its burgeoning budget and cushioning key economic drivers such as small traders.

He reckoned the best way is to renegotiate foreign debt with bilateral lenders to restructure debt to give the country’s economy more time to recover from the pandemic.