Reconsider proposal to up tax on power generators

Amid pleas for tax reductions to cushion Kenyans against the effects of Covid-19, a proposal to impose a 14 per cent value added tax on power generators is ill informed.

The Electricity Sector Alliance of Kenya has come out, and rightly so, to oppose the proposed amendments contained in the Tax (Amendment) Bill 2020 which, if approved, will result in the burden of higher costs of power being passed on to consumers.

Clearly, Kenyans cannot bear this additional cost. Of late, President Uhuru Kenyatta has repeatedly urged power providers not to disconnect Kenyans unable to pay their bills from electricity supply. A rise in power production costs will run counter to this call. Further, imposition of the tax will claw back gains made towards encouraging use of clean energy that is desirable for its ability to reduce greenhouse emissions, a great contributor to global warming and the attendant erratic weather changes.

An upward adjustment in power costs will also fly in the face of the Big Four Agenda by negatively impacting manufacturing, which the government seeks to promote as a means through which it will create more employment opportunities.

When Uhuru set out to improve the ease of doing business, he was aware of the drag that costly and often erratic power supply has on manufacturing. Many companies have been forced to close shop in Kenya, while others have relocated to countries that have friendlier policies to the manufacturing sector. Making power costlier would aggravate matters.