Atwoli calls for VAT review

COTU Secretary general Francis Atwoli addressing mourners during the burial service of his step brother Willy Okonji at Emutsasa primary school in Khwisero on December 30, 2022. [Benjamin Sakwa, Standard]

Workers umbrella body has urged the government to review the tax increment proposal to cushion workers.

Central Organization of Trade Unions (COTU) Secretary General for Dr Francis Atwoli said doubling the Value Added Tax increment will hurt workers.

And now, Atwoli wants the government to prioritize the welfare of Kenyan workers by considering alternative measures that will distribute the tax burden equitably.

"By increasing the VAT, Kenyans, either unemployed or employed, will be unable to have the needed purchasing power for both goods and services. Consequently, the economy will fail to grow considering most goods and services will be unaffordable to a majority of the working men and women," said Atwoli.

Atwoli's request comes a day after the National Treasury Cabinet Secretary Njuguna Ndung'u presented the Budget Statement at the Parliament.

In a statement, Atwoli urged the government to reconsider its proposed plan to double the Value Added Tax (VAT) rate from eight per cent to 16 per cent as it will have severe consequences on job creation and economic growth.

Atwoli further said that by making goods and services will be expensive through punitive VAT measures.

He said the Kenyan economy will suffocate due to low money circulation.

"It is thus our utmost concern that if we are serious about economic growth, we cannot make goods and services inaccessible to ordinary Kenyans.

Further, it is a fact that countries that have developed have allowed high circulation of money in their country due to low VAT on essential commodities," said Atwoli.

He proposed that high taxation should be on motor vehicles, alcohol and spirits, and other non-essential commodities.

According to Atwoli, if the 2023/24 Budget is left unchanged, the increase in VAT will force small-scale traders to close down their businesses and thus have a negative impact on jobs and growth.

"As COTU (K) we hope and trust the Government of Kenya will review its position on increasing VAT considering its far-reaching effect on both the poor and the rich," added Atwoli.