Economist David Ndii on Wednesday, March 25, broke down President Uhuru Kenyatta’s economic stimulus plans and identified several issues he felt needed remedying.
In a long post shared on his official twitter page – following his hard-hitting letter to the president which went viral, the economist laid out several issues he felt weren’t addressed.
Ndii argued out a detailed case regarding micro and small enterprises (MSMEs), pointing out that they were the very engines of the economy and that offering tax cuts to such enterprises most of which were currently closed down was counterproductive.
“Having listened to President Uhuru’s pronouncements, I am at loss as to what policy analysis informed them,
For the duration of the crisis, their income/turnover tax returns will be NIL, VAT returns NIL. I doubt they have cash reserves for salaries—PAYE returns NIL. These and many businesses are not going to pay taxes, the unpaid workers can’t spend, tax revenue is sure to fall,” reads a section of the economist’s statement following Uhuru’s latest directives aimed at helping ease the burden on the various industries following the Covid-19 pandemic.
Ndii went on to reveal that he had noticed several businesses that fall into the MSME category had closed down until further notice, leading him to question where such establishments would source for the various taxes still imposed on them.
“Government proposes tax breaks without cost-cutting. I am at a loss as to how this is a rational, responsible policy for a govt that was in a fiscal crisis before the COVID-19 shock, or how tax breaks translate to food on tables for ordinary people who’ve lost incomes and jobs,” he argued.
In a presser held at State House on Wednesday, March 25 President Uhuru announced a raft of measures that translated to reduced taxes.
The president explained that the new measures were aimed at protecting jobs for the people and providing certainty for all employers as well as their employees.
In line with this, all individuals earning a monthly salary of Ksh 24,000 and below receive a total waiver in taxes.
Small scale traders who had been required to submit their turnover tax every month also received a reprieve after its the reduction by 2%
“We offer a reduction of the turnover tax rate from the current 3% to 1% for all micro, small and medium enterprises,” stated Uhuru.
Ndii, in his argument, expressed scepticism on the practicality of the entire plan bearing in mind that most businesses were closed down but went on to state that he was hoping some of the policies issued would be reviewed.
“We can only hope that in coming days, President Uhuru Kenyatta and his govt will hear the cry of the people. As I said in my letter, this is our last big ask Mr President. Kenya is not big business. Listen to the people for once,” reads an excerpt from his statement.