NAIROBI, Kenya – Kenyan Members of Parliament are considering removing contentious tax proposals from the Finance Bill 2024, following significant pressure from constituents and feedback gathered during a public participation exercise.
A major protest against the proposals has been scheduled for Tuesday.
The National Assembly Finance Committee, set to present its final report on Tuesday, June 18, has indicated that it may scrap several tax measures based on the overwhelming public response.
According to a report by Kenya’s Citizen TV, the committee, chaired by Molo MP Kimani Kuria, is contemplating amendments to the proposed tax clauses, which were broadly rejected during 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,” National Assembly Majority Leader and Kikuyu MP Kimani Ichung’wah said.
National Assembly Budget and Appropriation Committee Chair and Kiharu MP Ndindi Nyoro echoed these sentiments, assuring Kenyans that their concerns, particularly regarding excise duty on bread and motor vehicle tax, will be addressed.
Proposed taxes under scrutiny include the motor vehicle tax.
The Bill initially proposed a 2.5% motor vehicle circulation tax, payable at a minimum of Sh 5,000 annually.
This tax, under income tax, faced backlash for being misplaced, prompting the committee to consider the road maintenance levy as an alternative.
The second is money transfer and internet tax.
The bill had proposed an increase in excise duty on money transfer services from 15pc to 20pc met with strong opposition from telcos and stakeholders which led the MPs to consider revising this clause.
The MPs are also considering scrapping the eco-levy which the Bill had suggested a KSh 150 per kilogram tax on plastic and other locally produced items, like diapers. Following concerns about its impact on production costs and consumer prices, MPs are likely to scrap this tax.
The excise duty on cooking oil may also be axed. The Bill had proposed 25% excise duties on imported crude palm oil and processed cooking oil, which could have doubled market prices, but faced significant resistance.
Additionally, legislators have pledged to revisit the proposal on excise duty on bread. Introducing a 16pc Value Added Tax (VAT) on bread, and removing it from the zero-rated items list, raised alarms about increased breakfast costs for households.
These discussions come after the National Treasury’s presentation of the 2024/25 fiscal year budget, totaling Sh4 trillion, to Parliament for approval.
To fund this budget, the Treasury proposed various tax measures in the Finance Bill 2024, aiming to generate an additional KSh 302 billion in revenue.
Other measures included raising the VAT registration threshold from Sh5 million to Sh8 million and introducing tax-free allowances for private sector employees.
