Companies
Manufacturers sue seeking to block 17.5pc export levy
Thursday September 14 2023
Kenya Association of Manufacturers (KAM) CEO Anthony Mwangi on February 28, 2023. PHOTO | DIANA NGILA | NMG
Manufacturers have filed a court case seeking to block the new 17.5 percent export and investment promotion levy on imported goods such as steel and clinker, saying it will negatively affect their business.
Their position contrasts with that of businessman Narendra Raval who backs the levy and whose steel and cement operations are set to benefit from the recent taxation changes.
Read: Clinker plant gives West Pokot economic hope
The Kenya Association of Manufacturers (KAM) on Monday filed a case before Justice Mugure Thande at the High Court in Milimani, Nairobi asking for the levy to be declared unconstitutional.
According to KAM, the levy will not achieve its intended goal of boosting local production and exports.
It cited lack of public participation, discrimination, failure by the National Treasury to set up the fund, and poor quality of locally available raw materials as some of the reasons they were opposed to the levy.
“That this honourable court’s urgent intervention is therefore manifestly necessary to protect the petitioner and its members from the wanton violation of their constitutionally enshrined rights,” reads the petition.
Respondents are the National Assembly, the Kenya Revenue Authority’s commissioner general, the Cabinet Secretary for National Planning and the Attorney General.
The Finance Act 2023 introduced a 17.5 percent export and investment promotion levy on imported clinker, steel and paper products in what the administration of President William Ruto reckoned would help the country’s manufacturing goal.
KAM insists the levy will be counterproductive as it affects critical raw materials, some of which are not locally available.
The lobby said the National Assembly failed to carry out an economic impact assessment to determine the impact of the levy which became effective on September 1.
KAM is especially concerned with the imposition of the tax on clinker, the main raw material for cement, and steel, noting that the raw materials available locally were allegedly of poor quality.
“This is in violation of the public’s right to protection of their health, safety, and economic interest enshrined under Article 46 (of the Constitution),” the petition goes on.
Read: State shields cement firms with clinker tax
KAM took issue with the fact that during the public participation exercise a majority of its members’ opposition to the new levy was ignored in the final report by the Finance and National Planning Committee.
Mr Raval, who recently voiced his support for the controversial Finance Act, of 2023, pushed for the increase of the levy during public participation.
