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Analysts warn tax proposal could affect environment

BUSINESS
By Fredrick Obura | April 7th 2020

Analysts fear gains made in protecting the environment from plastic waste could be eroded if tax law amendment bill 2020 sails through.

The Bill is proposing to delete schedule that introduced a reduced corporation tax rate on companies operating a plastics recycling plant. The reduced rate was 15 per cent for the first five years from the time they started operating. As a result, they shall be subject to the corporation tax rate of 25 per cent applicable to resident companies.

“This move erodes the efforts that the government has made in the recent past to protect the environment through deliberate measures such as banning the use of plastic bags, promoting the setting up of recycling plants among others,” reads comments by audit firm KPMG.

The government in 2017 banned the use of plastic bags for shopping a move, which affected over 100 manufacturers across the country. The UN estimates that 100 million plastic bags are handed out every year in Kenya by supermarkets alone.

Since the ban, the government says 80 per cent of the population have stopped using plastic carrier bags.

Although this is encouraging, some of the alternatives have also been found to be environmentally damaging.

Anyone found manufacturing, importing or selling a plastic carrier bag could be fined up to Sh4 million or face a prison sentence of up to four years. Using the banned bags carries a fine of more than Sh50,000 or a jail term of up to a year.

According to BBC fact check team so far, fines of between Sh50,000 and Sh150,000 have been handed out to around 300 people.

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