This is according to United Nations Conference on Trade and Development (UNCTAD) Secretary-General Dr Mukhisa Kituyi, while speaking at the Kusi Ideas Festival in Kisumu, who noted that reversing the taxes at this time would hurt the promise of recovery and reverse gains achieved by the measures.
“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,” Dr Kituyi said in a passionate appeal to President Uhuru Kenyatta today.
Treasury Cabinet Secretary Ukur Yatani last week announced that temporary Covid-19 tax reliefs announced in April by President Kenyatta will expire at the end of the year.
Yatani said the easing of the containment measures and subsequent resumption of normalcy had made it necessary to return to pre-Covid-19 tax rates from January 1, 2021.
This means that corporate tax rate, taxes paid by companies on their profits, will now revert to 30 per cent from the current 25 per cent. The individual income tax rate, also known as Pay As You Earn (PAYE), will also revert to 30 per cent from the current 25 per cent, while Value Added Tax (VAT) rate will go back to 16 per cent from the current 14 per cent.
The UNCTAD boss said that all economic recovery plans on the continent should be embedded within health recovery plans, and not the other way round where governments first focus on the pandemic before dealing with the economic devastation from the health crisis.
Dr Kituyi also asked African governments to de-risk startups, especially those in the digital economy, to allow them access to credit.
He also said governments on the continent must find ways to subsidise the agricultural sector as part of economic recovery plans.
Not all hit by Covid-19
Speakers at the festival noted that not all sectors have been negatively impacted by the pandemic, giving the continent a ‘fire exit.’ Some of the sectors that have thrived in the pandemic season include agriculture, health and telecoms, while the hospitality and aviation sectors have taken the biggest hit.
Dr Kituyi said the pandemic has caused a 49 per cent drop in foreign direct investments (FDI) into the continent, while the aviation sector has seen an 80 per cent drop in air travel.
Before going out to borrow, the continent was also urged to stem the outflows of illicit financial flows estimated at $90 billion, which Dr Kituyi said is enough to fund half of the Sustainable Development Goals (SDG) budget gap.
On her part, Ms Wanjiru Gikonyo, the Founding Trustee and National Coordinator of The Institute for Social Accountability (TISA), said Kenya has very good policies but the elephant in the room has always been why they are never implemented.
“We have very good policies, but why they are not implemented is a political question,” she said.
Ms Gikonyo noted that the country had taken too long to adopt community health system policies which would have come in handy in the war against the pandemic.