The United Nations Conference on Trade and Development (UNCTAD) Secretary-General Dr Mukhisa Kituyi urged President Uhuru Kenyatta to extend tax reliefs to Kenyans.
Speaking on Tuesday, December 8, at the Kusi Ideas Festival in Kisumu, Kituyi said that reversing the taxes would affect the economy and its recovery and also hurt the citizens who are grappling with the effects of the Covid-19 pandemic.
"I would like to suggest humbly that you do not suspend the waivers in the middle of a pandemic.
"Continue with those waivers until the alternative mechanisms that you have announced are in place, then you can remove them," Kituyi stated.
According to the UN boss, all economic recovery plans on the continent should be embedded within health recovery plans and not vice versa where governments primarily focus on the pandemic before dealing with the economic devastation from the health crisis.
He further proposed that African governments hatch strategies to subsidise the agricultural sector and cushion start-ups as part of the economic recovery plan.
Treasury CS Ukur Yatani announced that tax relief will be reversed the end of December 2020. Only Kenyans earning less than Ksh24,000 would be spared from the reversals.
On January 1, 2021, the corporate tax rate will revert to 30% from the current 25% while the individual Income tax rate will revert to 30% from the current 25% for those earning above Ksh24,000.
The Value Added Tax rate (VAT) on products will revert to 16% from the current 14%.
The reversal is set to hit Kenyans hard, coupled with new taxes that will be introduced in 2021 to boost the economy.
In October, KRA recorded a 15% drop in tax collection for the first quarter of the 2020/2021 financial year (starting July 2020).
