“Don’t kill the goose that lays the golden egg,” said Azimio La Umoja Presidential flag bearer Raila Odinga who slammed the Kenya Revenue Authority (KRA) for shutting down Keroche Breweries.
While holding an economic forum in the vote-rich Mt. Kenya region Friday, Odinga told KRA not to kill businesses in the private sector that have employed millions of Kenyans.
“The private sector is the engine for economic growth worldwide, therefore our government needs to create an enabling environment for the private sector to thrive,” said Odinga.
He said that punitive tax measures are forcing businesses to close, some of which are evading these taxes to keep their employees on payroll.
On June 30 last year, KRA flagged 1,058 companies and individuals for suspected tax evasion amounting to Ksh.132 billion in the 11 months through May 2021, more than fourfold the decade-long annual average.
“If taxes are low and manageable, people will pay. if you close the business, you are not killing the investor, you are also killing the employees. Let Keroche go,” added Odinga.
Odinga’s remarks come three days after Keroche was shut over failure to own up to the March 2022 agreement to repay Ksh957 million tax arrears.
Keroche Chief Executive Tabitha Karanja said the closure will see the brewer’s beer worth Ksh.350 million go to waste and over 400 employees sent home.
“I specifically request once more to be given a moratorium on the enforcement action that shut down our operations, and on the unsustainable payment plan that we agreed to under unbearable pressure.
KRA had ordered Keroche’s 36 bank accounts to be frozen over a tax dispute.
But following the pressed talks to allow the business to run, KRA Commissioner General Githii Mburu agreed to meet Keroche boss Tabitha Karanja on March 10 to chat a way forward for the brewer to start paying tax arrears.
Three months on, however, the taxman has shut down the business again at a time when the employment rate in the country has stagnated since the onset of the coronavirus pandemic in 2020 as Kenyans continue to grapple with the high cost of living.
“I therefore also humbly request for further engagement to consider a way for the company to meet its due obligations without sacrificing it and the livelihoods of countless Kenyan households,” Karanja pleaded with KRA.
Tax evaders in Kenya have nearly doubled the average 529 tax evasion schemes identified annually by the KRA’s intelligence unit between 2012 and June 2020.
The potential tax yield, on the other hand, is 441.54 percent more than the annual average of Ksh.24.38 billion in the eight-year period following the formation of KRA’s intelligence unit in 2012.
Around 682 individuals and firms were identified between July 2020 and May 2021 for possible tax evasion due to errors that denied the KRA Ksh.63 billion.
This is nearly five times the Ksh.10.63 billion average flagged since 2012 through June 2020 in 3,151 cases.
The remainder 376 cases with estimated tax evasion of Ksh.69 billion involve “hardcore” tax evaders who “deliberately” dodged tax obligations.