Bankers urge government to expand Kenya’s tax base

Kenya Bankers Association has called on PArliament make legislative interventions to expand the tax base rather than rely on the traditional contributors to shoulder the tax burden

The government has been asked to expand the country’s tax base instead of relying on the already existing tax avenues to increase collection and reduce pressure on businesses and on Kenyans. 

The Kenya Bankers Association (KBA) argues that an increase in tax avenues will not only ensure that the government collects more tax, but also promote innovation and growth in the country and increase earnings for Kenyans.

KBA, led by the Association’s Chief Finance Officer, Kennedy Mutisya, made the recommendations during a meeting with the National Assembly’s departmental committee on finance and national planning.

The association was meeting the committee to review the performances of the banking sector in the wake of hard economic times.

“We would like to propose to this committee to make legislative interventions to expand the tax base rather than rely on the traditional contributors to shoulder the tax burden,” Mutisya advised the committee members. 

During the meeting, the committee chaired by Molo MP Kimani Kuria, also asked banks in the country through KBA, to help stabilize depreciating shilling, amidst the soaring prices of commodities and the high cost of living in the country. 

Kimani said that mitigating the decline will help alleviate the continued increase in commodity prices even as the government works on finding a long-term solution.

The committee also underscored the crucial role of the 46-member association in helping mitigate the situation.

“As a committee we are concerned that the Kenyan shilling has continued to plummet against the US dollar and other major currencies. We would like to urge you to help mitigate the situation,” Kimani told the Association’s team led by the Chief Finance Officer, Kennedy Mutisya.

During the meeting, committee members faulted some banks for exacerbating the problem through hoarding of dollars, a move they noted had posed a big challenge to importers.

In response, the association told the lawmakers that they were not to blame on the matter as they only hold deposits on behalf of their customers.

They held that the depreciating shilling was a result of the dynamics of demand and supply for the US dollar especially. 

They also opined that the best remedy would be for the government to urge those hoarding dollars for speculative purposes, to release them.

Central Bank of Kenya governor Kamau Thugge in his submissions told legislators that the demand for foreign exchange had outweighed supply in most months leading to the depreciation of the shilling that has since officially crossed the Kshs.150 mark against the US dollar.

He argued that the Kenyan shilling had been overvalued as the country fought to maintain an artificially strong exchange rate.