On Monday, June 25, the National Assembly approved the Act, and President William Ruto then gave his assent.
The 16% value-added tax on fuel is one of the Act’s provisions that has already been put into effect, raising the cost of gasoline to Ksh195 a litre.
The FKE spokesperson, Steven Obiro, stated on KTN News’ program The Impact on Monday, July 3, that the Finance Act was likely to have consequences, such as business closures, increased unemployment, and slowed economic growth.
“The Finance Act includes taxes that will have varying effects on employers. The implementation of VAT on petroleum is one such tax. Employers frequently use vehicles to move their goods from the factory to the market, and these vehicles use gasoline. As a result, transportation is now more expensive, according to Obiro.
According to him, this cost rise is expected to have an impact on both direct and indirect costs because even inputs that are transported by road would cost more.
He claimed that firms, who are already struggling financially, find it difficult to raise wages for their staff.
Employers will be compelled to reduce staff and implement automation in order to handle these financial demands. Additionally, small and medium-sized businesses (SMEs) are likely to run informal operations in an effort to escape the burden of high taxes, he continued.
“It’s crucial to consider how employers will come up with the extra cash needed for their payments. In order to boost productivity and improve the quality of our products and get access to better, higher-paying markets, employers and the government must work together to discover solutions. We can anticipate seeing an increase in income and economic growth for the population by making these improvements.”
Johnson Mbugua, Managing Director of Moov Café & Bistro, shared Obiro’s concerns when he said that the Finance Act’s implementation will have an impact on his staff psychologically as well as financially.
“We expect difficult times ahead. As a restaurant, we promote vendors and performers to help create jobs. Even though our business has slowed down as a result of customers having less disposable income, our monthly electricity costs have gone from about 26,000 to 27,000 to 45,000,” said Mbugua.
“This will translate to job losses, but we need to ask ourselves what this will mean for the country in the long run,” he continued.
A content producer named Eric Omondi claims that the Kenya Kwanza government deceived Kenyans throughout its election campaigns.
“The feeling among Kenyans is one of being abandoned and left to fend for themselves. I have given the Kenya Kwanza government 90 days to respond, after which we will constitutionally begin the recall process.’ he said.
