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| Controversial Taxes in finance bill |
Members of Parliament (MPs) are mulling over the removal of controversial tax proposals in the Finance Bill 2024. National Assembly Finance Committee chair and Molo MP Kimani Kuria speaking at a past meeting. This followed pressure mounted on the legislators by their constituents and the views presented during the public participation exercise. The National Assembly Finance Committee, which will present its final report on Tuesday, June 18, hinted at scrapping the tax measures based on the views presented by Kenyans. Citizen TV reported that the committee led by Molo MP Kimani Kuria considered amending the proposed contentious tax clauses, which were unanimously rejected during the stakeholder engagements. “We have listened to the views and pleas made by Kenyans during the public participation exercise. We will amend the Finance Bill 2024 based on these views,” said the National Assembly Majority and Kikuyu MP Kimani Ichung’wah. Echoing these sentiments, the National Assembly Budget and Appropriation Committee chair and Kiharu MP Ndindi Nyoro assured Kenyans that their views on certain taxes, such as excise duty on bread and motor vehicle tax, will be considered. Which taxes could be removed from Finance Bill 2024? 1. Motor vehicle tax The Bill proposed to introduce 2.5% motor vehicle circulation tax on the value of a car, paid by the owner at a minimum of KSh 5,000 per year. The proposal under income tax was considered misplaced, a move that could see the committee resort to the road maintenance levy as a replacement. 2. Money transfer and internet tax Money transfer services will attract a 20% excise duty, up from the current 15% if the Bill is passed without any amendments. However, telcos and key stakeholders raised strong concerns over this clause, pushing MPs to consider making changes. 3. Eco-levy The Finance Bill 2024 also proposed introducing KSh 150 per kilogramme of plastic and other locally produced products, such as diapers. The MPs hinted at scrapping this tax after local manufacturers and Kenyans raised concerns over its ripple effect on the cost of production and consumer price. 4. Excise duty on cooking oil The Bill also proposed a 25% excise duty on imported Crude Palm Oil (CPO) and a 25% excise duty on processed cooking oil with no offsetting mechanism. This could have seen the price of cooking oil in the market more than double. 5. Excise duty on bread The Bill proposed introducing a 16% Value Added Tax (VAT) on bread, exempting it from zero-rated items. The legislators said they would reconsider changes after Kenyans raised concerns about the tax’s effect on the price of the common breakfast in their homesteads. Kenya’s budget 2024/25 This came after the National Treasury presented the fiscal year 2024/25 KSh 4 trillion budget to parliament for approval. Treasury proposed the tax measures in the Finance Bill 2024 to raise over KSh 302 billion in additional revenue for the budget. Other measures include increasing the VAT registration threshold from KSh 5 million to KSh 8 million and introducing tax-free allowances for private sector employees.
by Wycliffe Musalia