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New tax proposal for small-scale businesses draws mixed reactions

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A plan by the government to raise revenue by introducing a presumptive tax on small-scale business owners has elicited mixed reactions in Machakos.

The 15 per cent tax targets about 2.7 million small-scale traders across the country. It was supposed to come into force at the beginning of this year.

The Treasury, through the Kenya Revenue Authority, hopes to collect at least Sh5 billion annually.

Businesses to be affected include bars, cyber cafés, barber shops, kiosks, eateries and private schools. The tax was to be embedded in trading licenses.

A cyber café owner in Machakos, who requested anonymity, welcomed the move, saying he does not see how it will hurt his business.

He said since the increase will be calculated annually, the impact on small-scale traders will be minimal.

“Unless there is a hidden agenda by the government, I see no problem with the implementation of the new tax. The problem arises when the Kenya Revenue Authority imposes additional taxes on food since the burden is always passed onto the consumer,” he said.

But James Mbii, another cyber café owner in Machakos town, said the revised tax will hurt small businesses.

He urged the government to make good use of the newfound political goodwill in the country, based on the handshake between President Uhuru Kenyatta and ODM leader Raila Odinga. Their cooperation has created an environment conduciving to starting business, he said.

“This will in the long run help us service our domestic needs without having to overtax the common person who is already struggling,” Mbii said.



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