Redefining Taxation: KNCCI’s Rutto Calls for a Broader Tax Base, Not Overloading Existing Taxpayers

by | May 13, 2023 | News | 0 comments

Erick Rutto, the vice president of the Kenya National Chamber of Commerce and Industry (KNCCI), is pushing for a more equitable approach to taxation. He urges the government to focus on expanding the tax base rather than continually pressuring existing taxpayers.

Rutto, who is currently in the race for the KNCCI presidency against the standing president, Richard Ngatia, relayed these sentiments during a convention in Meru. The event was attended by KNCCI representatives from various regions including Embu, Tharaka Nithi, Meru, Isiolo, and Marsabit. Rutto’s running mate, Mustafa Mohammed, the current KNCCI Mombasa branch chairman, also attended.

In Kenya, the discrepancy between the number of formal and informal businesses is glaring. Of the country’s 8 million businesses, only around 1.7 million are formal, leading to a significant deficit in tax revenue. Rutto believes that the government and KNCCI can work together to rectify this situation.

Rutto’s vision for the KNCCI is to transform it into a fully professional business organization, deeply integrated into law, enabling its direct participation in policy-making. “My goal as president of the KNCCI is to collaborate with the government to help our local businesses thrive,” he stated.

Rutto contends that the current proposal to increase taxes on formal businesses and workers is counterproductive. He believes that the key to sustainable fiscal policy lies in the government tapping into the untapped potential of the 6 million informal businesses.

If successful in his presidential bid, Rutto promises to bolster the organization’s structure at the county level, drawing in more business people. Mohammed, in his capacity as the Mombasa branch chairman, has already successfully gathered data on over 31,000 businesses in the coastal city, a strategy that could be applied nationwide.

“In Mombasa, we’ve registered 31,000 small and medium-sized enterprises (SMEs), 90 percent of which are informal. Leveraging this data, we persuaded the county government to allow tax payments in installments. This approach could be replicated across the country, attracting more taxpayers,” Mohammed proposed.

However, Rutto and his allies are not without their grievances. The current tax policy, according to the KNCCI Meru branch chairperson, is a significant burden on businesses. Furthermore, Rutto criticizes Ngatia, the incumbent president, for neglecting the chamber of commerce when he entered the Nairobi gubernatorial contest.

“He failed to transfer his duties when he moved into politics, and he was even signing checks at political rallies. My hands were tied, and I was unable to run the office,” Rutto lamented.

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