26 alcohol factories shut in Uhuru-era tax disputes reopened
At least 26 alcohol manufacturers who had been shut down during President Uhuru Kenyatta’s administration have reportedly resumed operations, as the new government continues to reverse actions taken in the previous regime.
Reports indicate that the 26, including Thika-based Africa Spirits Ltd – owned by businessman Humphrey Kariuki, Mount Kenya Breweries Ltd, Rift Valley Brewing Company and Wananchi Breweries Ltd, which had been closed over different issues, but mainly tax disputes with KRA have reopened.
Other factories are Thika-based Vinepack Ltd, Big Five Breweries Ltd, Elle Kenya Ltd, Lumat Company Ltd and Tona Brewing Ltd.
This comes as President William Ruto and his deputy Rigathi Gachagua persist in their scathing attacks on the previous regime, accusing it of criminalising enterprise.
Agency notices
During a Kenya Association of Manufacturers (KAM) event last week, Mr Gachagua lectured KRA for closing businesses and issuing agency notices for businesses it had issues with, indicating that President Ruto’s government would not entertain such moves.
“The issue of closing factories for taxpayers who are suffering is a thing of the past because it is foolish. The issue of tax notices and agency notices where you close accounts, if you shut down an account for six months (and) somebody cannot do business, where will you collect tax the following year? When you shut down a factory, those employees lose their jobs (yet) they were paying Paye (Pay As You Earn tax), where will you get the money from?” Mr Gachagua asked.
He faulted the taxman for shutting the Africa Spirits Ltd factory in Thika, indicating that the move had cost the authority about Sh1.8 billion in revenues.
Also read: Tax blues for alcohol makers
“That factory was paying about Sh50 million in terms of tax every month. They send policemen there, shut it down, arrested Humphrey Kariuki – a very enterprising Kenyan, an honourable man, a man who has toiled through his life – locked him up for four days with ordinary criminals and KRA lost Sh50 million every month. For three years we have lost a whooping Sh1.8 billion. It was a foolish decision and such things will never happen in the Ruto administration,” Mr Gachagua said.
The new administration is setting an image of one ready to pamper taxpayers into paying their due share, a move that is the opposite of the combative stance KRA has taken, growing revenues through instilling fear in businesses.
“Taxpayers are your dairy cow. For a cow to produce milk, you have to be very nice to the cow. We have told KRA to look after taxpayers the way you look after a good dairy cow to continue producing milk,” Mr Gachagua stated.
KRA has not confirmed or denied the reopening of the alcohol manufacturers or indicated conditions under which they were reopened having been closed down due to tax disputes and failure to meet other standards.
Combative measures
KRA had not responded to questions by the Daily Nation on the issue by the time of going to press on Tuesday.
The tax collector has also in recent months been engaged in ugly exchanges with Keroche Breweries over tax disputes involving more than Sh20 billion, forcing the authority to shut down the brewer several times, and at some point it issued agency notices, effectively blocking the firm from funding.
The new government insists that businesses must be given the space to thrive, objecting to combative measures by government agencies.
“That policy direction (from President Ruto) has trickled down that public officials have no business standing in the way of business, being a hindrance, creating road blocks. Their work is to support and facilitate business and shortly, in a few months, when we complete the process of public sector reforms in terms of telling our public officials of their new roles in the Ruto administration, there will be no bureaucracy and red tape in matters business and investment,” said the DP during a taxpayer event by KRA last Friday.
