Counties hindering free trade with double taxation

Richard Ngatia, President KNCCI. 

One of the major concerns raised by various stakeholders during recent consultative engagements with the Senate Committee on Trade was the high cost of transporting goods in the country.

Stakeholders, including our members, voiced concerns about the multiple cesses and other secondary taxes slapped on cargo in transit. For instance, if you are moving cargo from Mombasa to Nairobi, each county subjects transporters to cess. During our meeting, also attended by the Cabinet Secretary for Cooperatives and SMEs Simon Chelugui and his Tourism counterpart Peninah Malonza, we detailed how this double or treble taxation is hindering the smooth flow of goods to markets.

Whilst recognising the need for counties to raise revenues through such levies, it should not be done in a way that compromises the movement of goods, resulting in higher prices for consumers as traders pass on the extra cost to them. 

According to Harvard Historian and scholar Albert Bushnell Hart, taxation is the price which civilised communities pay for the opportunity to remain civilised. With higher retail prices, demand for goods shrinks, lowering demand and supply for goods with the resultant effect of constricting the economy.

The symptomatic long-term effect of increased taxation is less money in circulation, reduced employment opportunities and lower savings and investments. The gravity of these taxes couldn’t have been expressed better at a meeting led by Kenya National Chamber of Commerce and Industry (KNCCI) coastal regional coordinator Hassan Wario as well as the Chamber’s Kilifi chapter chairman Majid Swaleh.

The meeting, which was attended also by Council members from Lamu, Tana River, Kwale and Taita Taveta, resolved to help governors and trade executives to harmonise taxes and cess charges across the counties. Our proposal is to have parliament review the prohibitive laws that have facilitated multiple cess collections.

We commend President William Ruto’s efforts to create a conducive environment for businesses to thrive. But double taxation will undo all the hard work in improving the business environment. When the President graced our Annual General Meeting (AGM) last year, he left no doubt his administration supports investment.

This week, I will be attending the World Chamber Federation (WCF) AGM in Bogota, Colombia as its Executive Council member. This is an opportunity to market Kenya as a prime investment destination.