President William Ruto has dropped major tax proposals that have attracted uproar among Kenyans in recent weeks. Among those dropped are taxes bread.
The Finance Bill had earlier mandated the introduction of Value Added Tax (VAT) on bread, a basic commodity. This would have attracted a 16 percent tax, raising the price of a 400-gram loaf by at least Sh10, making it unaffordable for many people.
Excise duty on vegetable oil and VAT on transportation of sugar have also been removed.
Locally manufactured sanitary pads and diapers proposed tax has also been dropped to make them affordable.
The Finance Bill proposes a tax sytem including Sh300 levy for people over 25 to boost revenues by Sh323 billion (from Sh2.62 trillion to Sh2.94 trillion) effective from July 1.
Additionally, there will be no tax increase on mobile money transfers services including Mpesa.
Motor Vehicle Tax Dropped
The proposed 2.5% motor vehicle circulation tax has been dropped,
The tax required motorists to pay up to Sh100,000 annually to keep their vehicles on the road. And it’s calculated based on the vehicle’s value, with a, minimum deduction of Sh5,000 per year.
National Assembly Finance Committee chair Kimani Kuria also announced the excluson of the proposal to impose Eco levy on three wheeler, motor cycle, bicycle, and wheel chair tyres.
Other Exemptions
Excise duty imposed on imported table eggs, onions and potatoes has also been dropped to protect local farmers.
Many small businesses won’t need to register for VAT anymore because the registration threshold has increased from KSh5 million to KSh8 million.
The proposal to amend the Data Protection Act to exempt the processing of data related to tax or duty enforcement has been dropped. This Act cannot be amended through the Finance Bill.
Sin Tax and Other Finance Bill Proposals
However, the proposed Finance Bill sin taxes still stand.
This includes higher duties on beverages based on their alcohol content. And increased taxes on both filtered and unfiltered cigarettes.
The adjustments also include a new environmental levy on a wide range of goods such as mobile phones, TVs, and batteries. The levy aims to fund environmental conservation efforts but has sparked debate over its potential impact on consumer prices.
Pensions
The Finance Bill 2024 also proposes increased pension contributions to Sh360,000 annually (Sh30,000 monthly) from the Sh240,000 annually (Sh20,000 monthly) currently allowed.
The tax-free contributions are aimed at increasing retirement savings.
While Zakayo’s government aims at broadening the tax base and increasing revenue collection to support government programs and initiatives, concerns arise about their impact on everyday expenses for Kenyans.
By Vivian K.