President Ruto’s regime is set to implement sweeping changes such as healthcare to its tax regime under the proposed Finance Bill 2024. This move aims to boost tax revenues by Sh323 billion (from Sh2.62 trillion to Sh2.94 trillion) effective from July 1.
Among the notable adjustments are the introduction of VAT on bread.
Under the new proposals, bread, previously exempt from VAT, will now attract a 16 percent tax. This is expected to raise prices by at least Sh10 for a standard 400-Gram loaf.
Additionally, mobile money transfers services including Mpesa, airtime, and data charges will see a rise in excise taxes, increasing the cost of these services for consumers.
Motor Vehicle Tax
Furthermore, the Finance Bill introduces a new motor vehicle circulation tax, requiring motorists to pay up to Sh100,000 annually to keep their vehicles on the road.
This tax will be calculated based on the vehicle’s value, with a, minimum deduction of Sh5,000 per year.
Sin Tax
The proposed Finance Bill 2024 in Kenya suggests raising taxes on items like alcohol and cigarettes, known as sin taxes.
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 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.