The government is now in the final stages of crafting other tax-raising measures, through the Tax Amendment Bill
Treasury Cabinet Secretary, John Mbadi is set to reintroduce some of the contentious proposals in the deleted Finance Bill 2024 as the government aims to collect Ksh150 billion more to cater for the deficit caused by the withdrawal of the Bill.
After hinting at a revisiting of some of the clauses in the controversial bill that was outrightly dismissed by the protesting Gen Zs, the government is now in the final stages of crafting other tax-raising measures, through the Tax Amendment Bill, being processed for a fresh introduction to Parliament.
Speaking to Citizen TV on Sunday, August 18, Mbadi confirmed that talks had taken place surrounding 53 amendments but after discussions, the number was trimmed down to 49.
Among the controversial clauses set to make a comeback include the Eco Levy, which had previously proposed to compel manufacturers and importers of various goods, including diapers, rubber tyres and electronics to “pay for the negative environmental impacts of the goods” they produce or ship into Kenya.
Entrance to the National Treasury. /NATIONAL TREASURY AND ECONOMIC PLANNING
Even though the government insisted that it must pass the Eco Levy to improve the economy of the country, Mbadi assured that items such as sanitary towels among other sensitive items would be omitted.
“Eco levy has some meanings; we will just make sure that they are levied on those items which pollute the environment,” he elaborated, adding “Issues that are contentious like sanitary pads, those we will leave out.”
The moment the Eco Levy was thrown away alongside the Finance Bill 2024, Kenyans were spared from paying more for commodities such as smartphones, loudspeakers, microphones, earphones, monitors, projectors, ATMs, calculating machines and cash registers.
Eco levy was going to affect manufacturers and importers in the country where the price would have been increased for the consumers. Other items targeted by the levy were batteries, plastic packing bags, and rubber tyres for vehicles, motorbikes and bicycles.
The eco-levy, which was among the key subjects for the street protests, also saw rejection by multi-national companies, such as the American giant beverage manufacturer and distributor Coca-Cola, which was opposed to the 10 percent excise duty in the proposal.
At the time, the companies threatened to leave the country. Following the rejection of the Finance Bill 2024, the Government was left in a dilemma after the 2023 Finance Bill was also declared unconstitutional.
Two days after declining the Finance Bill of 2024, President Ruto signed the Appropriation Bill 2024 to tide over the government as it seeks funds to finance its development agenda.
President Ruto reduced his budget by Ksh174 billion and announced that his administration was considering taking a loan of Ksh169 billion to cover the gaps in the budget.
The collected Ksh150 billion would therefore go towards paying teachers who have threatened to go on strike, pay security forces and help with university funding.
“Some people have been avoiding paying taxes because of the deadlines. we hope that we will have more people paying,” Mbadi said.
The government also plans to tax-exempt some of the basic commodities like bread, in a move that it says will save an additional Ksh70 billion. Mbadi added “We have been paying Ksh525 billion in tax refunds and some are fictitious… By tax-exempting bread, we will maintain the same but reduce government expenditure.”
CS Mbadi also revealed that a raft of changes is coming to the Kenya Revenue Authority (KRA) which will also bring to the coffers, another Ksh105 billion by “sealing all loopholes through automation of systems.”
The ministry is now rushing against time, to have these tax measures in place by September 30.
Treasury Cabinet nominee John Mbadi facing the Parliament Appointments Committee on August 3, 2024. /PARLIAMENT KENYA