Ndii accuses manufacturers of influencing tax policies, bribery

President William Ruto's economic advisor David Ndii. [File, Standard]

State House's top economic adviser David Ndii has blamed manufacturers and powerful lobbies for "incoherent" business taxes, amid mounting concerns by businesses on the state of doing business in the country.

Dr Ndii further claimed yesterday that there is a scheme in place where taxes are being 'sold', insinuating that certain taxes are being influenced by external factors.

These favourable taxes are then allocated to benefit individuals who were involved in influencing decisions in exchange for bribes from government officials.

Dr Ndii, one of the economists and experienced technocrats selected by President William Ruto to assist in revitalising the struggling economy and executing the bottom-up economic model advocated by the ruling Kenya Kwanza coalition, further criticised industry participants for engaging in cutthroat competition while advocating for tax policies.

"We did actually have time to look at the tax code very very closely in the first year. It is very capricious and very incoherent. But partly a lot of that has to do with the industry itself," he said.

"We have a very bad lobbying system coming from even the manufacturers so that you see one person has lobbied for protection on this, another person has lobbied for something with an opposite effect. And there is not sufficient overarching view of it all."

Dr Ndii, who spoke during an economic forum organised by the NCBA Group in Nairobi, alleged that due to the taxes-for-sale scheme, some taxes did not make economic sense.

"I asked the people who do the taxes why they had put one tax here and another one here, but none of them could give me a proper answer which makes economic sense, and then you realise these taxes have been bought," he said. "These taxes have been paid for someone. The industry is not as innocent as we like sometimes to make ourselves."

The Standard could not immediately get a comment from the Kenya Association of Manufacturers (KAM), one of the most influential business lobbies in the country that draws support from leading businesses across various sectors of the economy on Dr Ndii's comment.

We also did not immediately reach the Kenya Private Sector Alliance (Kepsa), which has more than half a million members.

Dr Ndii's assessment comes at a time when Kenyan manufacturers have warned they will be forced to reduce or halt production and shift investments to other parts of the world to reduce costs amid soaring energy prices and new taxes.

The manufacturers say the prevailing high cost of production is edging them out of business. KAM recently asked Kenyans to brace for tough times ahead as a result of the new taxes and cost of fuel.

Any shutdowns of factories would deal a blow to one of the main priority sectors in President William Ruto's administration's first term.

The high cost of production and inputs, they say, remains a thorn in the side of firms, forcing them to lay off more people this year than they did last year. The manufacturers have advised the government to lower taxes.