Bars and restaurants owners at the coast and Nairobi County have raised a red flag over high taxes and fees levied by county governments for playing music is hurting their business by pushing up operation costs.
They claim of double taxation and a host of other unfriendly legislation is hampering their efforts to grow and develop the sector in which they contribute 60 percent of annual revenues collected by the government.
Among the tough laws include double taxation for playing music and about 15 Licenses they must get under the County Governments before they start operations.
The operators are now opting to either pass these extra costs to consumers or close down their business that now cost them up to 50 percent in losses since the inception of new tax regime that allows county governments raise more development cash through services.
Their umbrella body, Pubs, Entertainment and restaurant Association of Kenya (PERAK) singled out leisure entertainment has become expensive warning that customers could soon dig deeper into their pockets to get the service.
“Usually when it becomes expensive, leisure entertainment, become the first casualties on people’s budgets. We have experienced closure of businesses both at the coast and Nairobi due to the increased cost of doing business occasioned by heavy taxes,” said PERAK, National Vice Chairperson, Alice Opee.
Whilst the association affirmed its support for county governments to raise funds from the entertainment industry as a norm in many economies through sin tax, it raised concerns over discrimination in revenue collection methods used by government authorities.
“We feel the field is not even with most unregulated entities not being captured into the tax bracket , making it expensive for most of our members,” PERAK,Nairobi Region Chairman Patrick Muya.
High cost of electricity and other statutory expenses they claimed is fast driving them out of the business.
Over 100 direct employees have been sent on compulsory leave and others sent packing over the last one month alone as operators try to manage these costs.
The Association wants County governments to consider harmonization of common charges to business to tame double taxation.
On Wednesday Commission of Revenue allocation (CRA) challenged county governments to strictly peruse the finance law that covers their powers and mechanisms they use to raise additional development revenues.
CRA Chairman, Micah Cheserem said the law only allows county governments to charge for services offered by operators and warns against imposing taxes.