Nairobi, Kenya – August 19, 2024: Treasury Cabinet Secretary John Mbadi has issued a strong statement addressing the growing resistance from multinational companies against the government's proposed eco levy. Speaking during an interview on Citizen TV, Mbadi emphasized the need for these corporations to explain their objections to the environmental tax, which was introduced earlier this year.
The eco levy, set at 10 percent on imported goods, has been a point of contention, particularly among multinational companies operating in Kenya. These companies have argued that the levy creates an unfavorable business environment, threatening to pull out of the country if the tax is enforced. However, Mbadi stood firm, insisting that the levy is a necessary measure to ensure that manufacturers take responsibility for their environmental impact.
"They will tell us why they oppose us because you know, they are in business, but we also have an interest as a country. This country is not a dumping place," Mbadi stated, highlighting the government's commitment to protecting Kenya's environment from further degradation.
Environmental Responsibility Versus Business Interests
The eco levy, as explained by Mbadi, is designed to hold manufacturers accountable for the environmental harm caused by their products. The Treasury's stance is that companies contributing to pollution should bear the costs associated with mitigating the damage.
"We are saying that if you are injurious to the environment, then you must pay for helping make good the harm that you have caused," Mbadi added.
Despite the resistance from multinational corporations, Mbadi assured the public that the eco levy would be applied selectively to avoid burdening ordinary citizens. He acknowledged the concerns raised by various groups, including Gen Z activists, who have protested against the tax's application to essential goods like bread packaging and sanitary pads.
"In Eco Levy, we will target those areas that will not affect the common mwananchi (citizens)," Mbadi reassured, indicating that the government would focus on taxing products with significant environmental impacts.
Multinational Concerns and Legislative Amendments
During the public participation phase, several multinational corporations, including major beverage companies, voiced concerns that the eco levy would create a volatile business environment in Kenya. They argued that such a tax could erode investor confidence and disrupt their strategic planning.
In the initially proposed Finance Bill 2024, the Treasury had planned to extend the 10 percent eco levy to both imported goods and locally manufactured plastics. This proposal was met with strong opposition, with industry players warning of potential double taxation if the levy were implemented.
In response to these concerns, Mbadi disclosed that the Treasury is already working on revising the Finance Bill. Originally containing 53 amendments, discussions have reduced this number to 49, signaling the government's willingness to find a middle ground.
The debate over the eco levy continues to highlight the tension between promoting environmental sustainability and maintaining a favorable business environment in Kenya. As the Treasury moves forward with its legislative agenda, the final outcome will likely depend on the ability to balance these competing interests.
