NAIROBI, Kenya- The National Assembly Finance Committee has invited Kenyans for a public hearing on the Finance Bill 2024.
This followed the ongoing public participation exercise in which the committee has been receiving submissions from stakeholders and experts on technical subjects of the Bill.
The committee led by Molo MP Kuria Kimani resolved to hold a public hearing at the Kenyatta International Conference Centre (KICC) on Monday, June 10, 2024 between 9.30 am to 5.00 pm.
“We hereby invite the public and stakeholders to submit their oral representation and written memoranda on the Bill to the Departmental Committee on Finance and National Planning during the said public hearing,” the committee invite read in part.
The Bill proposed a raft of new tax measures aimed at raising over KSh 302 billion to finance the financial year 2024/25 budget.
The tax proposals sparked debate among Kenyans and industry players who argue that if the Bill sees the light, it will overburden common mwanchi.
According to AAR Insurance CEO Justine Kosgei the new motor vehicle circulation tax, for example, will negatively impact the country’s economy, reversing the gains made in the industry.
“The 2.5% motor vehicle tax is not viable at the current economic environment in Kenya. What the government need to do is to listen to the sector players for alternative ways to raise revenue. Otherwise, this levy will hurt many motorists and the economy will suffer,” Koskei told Y News in an exclusive interview.
Which tax proposals in Finance Bill 2024 will hurt Kenyans?
- Motor vehicle circulation tax
The Finance Bill 2024 proposes to introduce a 2.5pc motor vehicle circulation tax, payable by car owners per year.
If passed, the tax will be capped at Sh5,000 and Sh100,000 on the value of the car and paid to insurance companies during submission of insurance cover fee.
- VAT on financial services
The Bill proposes to introduce VAT on some financial services that were previously exempted.
These includes credit and debit card issuance, and foreign exchange transactions, which will now attract 16% VAT.
- Exercise duty on money transfers
The national Treasury sought to increase the excise duty charged on money transfers starting July 1, 2024.
If the proposal sails through, money transfer charges will attract 20pc excise duty, up from the current 15pc.
- VAT on bread
The committee also sought to raise revenue by introducing a 16pc VAT on ordinary bread, which was originally zero-rated.
The move will see the price of a 400gm of bread in the supermarkets and shops across the country increase to Sh75 from Sh65.
- Excise duty on cooking oil and its products
The Finance Bill 2024 proposes to impose excise duty on cooking oil and its products including packaging.
The Edible Oil Manufactures Association of Kenya raised concerns of the taxes, saying they will make cooking oil expensive in the country.
Cooking oil is not just an isolated product. It is a fundamental ingredient in a myriad of everyday food. The exercise duty will cause a cascading effect on prices of these items,” the manufactures statement read in part.
Which taxes are proposed on cooking oil?
According to the association, the following taxes will be imposed to cooking oil if the Bill sails through.
- 25% excise duty on imported (COP) Crude Palm Oil
- 25% excise duty on processed cooking oil with no offsetting mechanism
- 10% excise duty on plastic packaging
- Eco-levy of Sh150 per kilogram or a 20-litre cooking oil jerrican.
This will see the prices of a 5-litre cooking oil increase to Sh2,340, up from the current price of Sh 1,500, while a 20-litre cooking oil will retail at Sh6,396 from Sh4,100.
The Eco-ley will also affect prices of things like diapers, which are essential for women and mothers in the country.
