Employers warn of further job cuts as they slam new taxes


Employers warn of further job cuts as they slam new taxes
FKE National President Habil Olaka addresses a news conference on February 27,2021

In Summary

  • The federation has for instance lamented the hike in the petroleum levy last year which pushed up petroleum prices along with the recent re-introduction on the minimum tax to loss making entities.
  • National FKE President Habil Olaka has on his part fingered the government for burdening employers with the task of pulling the economy out of the pandemic’s devastation through greater taxes.
  • Subsequent job cuts could dampen prospects of an economic recovery this year with 2020 barely seeing the addition on any new jobs.

Employers represented by the Federation of Kenyan Employers (FKE) have warned of further job cuts as business struggle to thrive under higher taxes.

The federation has for instance lamented the hike in the petroleum levy last year which pushed up petroleum prices along with the recent re-introduction on the minimum tax to loss making entities.

According to the employers, provisions such as the minimum tax negate relevant tax laws and regulations to promote desirable social and economic goals.

“Enterprises are struggling to stay afloat due to the COVID-19 pandemic. If pushed further, the small and medium enterprises could be tipped into premature closure, hurting jobs and the economy,” the FKE said in a statement on Friday.

National FKE President Habil Olaka has on his part fingered the government for burdening employers with the task of pulling the economy out of the pandemic’s devastation through greater taxes.

“The COVID-19 pandemic has affected every player and by this I mean the government, employers and employees. There has been an attempt for instance to recoup tax revenues. There is however need for a re-balancing act to ensure the recovery is not premised on burdening one particular group,” he said.

Employees holding out for a return to a 100 per cent payment rate might meanwhile be required to wait with the FKE terming demands on salary increments as unsustainable.

“We are now seeing an agitation by Unions and clamor for an increase in wages and Salaries to meet the demands of the rising cost of living. These demands are unsustainable to most employers due to the difficult operating environment occasioned by the COVID-19 pandemic,” the FKE added.

Subsequent job cuts could dampen prospects of an economic recovery this year with 2020 barely seeing the addition on any new jobs.

According to data from the Kenya National Bureau of Statistics (KNBS), the country jobs growth stood at a negative rate as of the end of September with the unemployment rate trending upwards at 7.3 per cent in September from a lower 5.2 per cent at the end of March.

In addition to proposals to re-look the tax regime, FKE has also called for the lifting of the night-time curfew to provide further impetus for enterprise.

FKE’s remarks are ahead of the 2021 Budget Presentation to the National Assembly, scheduled for mid-June which largely features more concerns among Kenya’s business community as it involves the declaration of new taxes.

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Story By Kepha Muiruri
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