The effect of taxes and levies on the profitability of sugar factories in Kenya
Otieno, George William
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The objective of the study is to examine the effects of taxes and levies on the financial performance of sugar factories in Kenya. The study has been occasioned by repeated calls to the government by the millers, growers associations and national leaders (especially from the sugar growing zones) for the rationalization of the taxation regime relevant to the industry. The performance of the sub-sector continues on a downward trend despite efforts by the government and the various stakeholders to revamp it, a fact that threatens its very existence. The initiatives that have so far been taken, sad to say, have seen very little success with the sub-sector sinking deeper into the seemingly unending problems. Earlier researches have recommended further investigations into the problems bedeviling the sub-sector. The researcher collected data from all the institutions with stakes in the sugar subsector. The data were collected from both primary and secondary sources. The primary data were be collected from the management in the sugar factories through designed questionnaires. The secondary data were be collected from the millers, other formal institutional publications, journals and reports. The results of the research will be used to give more insights into the perceived income and pricing distortions caused by the tax regime in the industry. It will enable the millers and other stakeholders to push the agenda for the scrapping or reduction of taxes and levies in the sub-sector. This will in effect allow the millers to pass down the benefits to the consumers in terms of price reductions. The financial bottomlines of the factories are likely to improve since the levies and taxes contribute to the high cost of producing sugar. The sub-sector is likely to be attractive to prospective investors since its viability as an investment will be clearer from the tax reduction strategy. The researcher expects to show by analysis how the impact of taxes and levies affects the profitability of the milling factories. The final report will be made available to all key stakeholders in the sugar sub-sector for evaluation and implementation. The results of the study will also be used for any further research in the sugar sub-sector.