20 September 2018

Kenya: D-Day as Lawmakers Debate, Vote on Kenyatta Tax Proposals

Nairobi — The National Assembly will on Thursday debate and vote on President Uhuru Kenyatta's tax proposals, which include a cut on Value Added Tax (VAT) on fuel products from 16 per cent to 8 per cent.

In addition to the VAT on fuel, MPs will also debate tax measures floated by President Kenyatta including motor vehicle duty of between 20 and 30pc and an increase in duty on mobile and Internet data services from 10pc to 15pc.

There is also a proposal to increase the excise duty on mobile money transfer from 10pc to 20pc.

The Housing Development Fund tax to be paid by the employees has been revisited and increased to 1.5pc and employer at 1.5pc of the monthly basic salary with a penalty of 5 per cent for employers who fail to submit the contributions.

President Kenyatta has said that if there is a revenue shortfall, it will negatively impact the implementation of the Big Four Agenda of universal healthcare, food security, expanded manufacturing, and affordable housing.

Some of the tax measures proposed by Treasury - and rejected by the National Assembly - would create a Sh48 billion financing gap.

The vote comes amidst intense lobbying by both Jubilee and NASA leadership to shore up support for the motion which has also faced resistance from a section of legislators.

However, following Parliamentary Groups meetings, Jubilee and NASA MPs agreed to support the proposal.

A Jubilee Party Parliamentary Group meeting chaired by President Kenyatta agreed to support the memorandum with 181 MPs who attended the meeting expressing their support.

While NASA had initially vowed to shoot down the proposal, a different position was adopted Tuesday afternoon during a meeting attended by NASA leader Raila Odinga.

Minority Whip Junet Mohammed who read the coalition's resolution stated that their support is, however, conditional for one year.

The announcement is in contrast to Monday's statement issued by Senate Minority Leader James Orengo who said the coalition will reject the president's proposal arguing that it will make life more difficult for Kenyans.

Orengo had said that the position was shared by NASA leader Raila Odinga who also attended today's meeting at Orange House.

In his address to the nation last week, President Kenyatta said he sent back the Bill which proposed to suspend the 16pc VAT on petroleum products because it does not reflect the rising challenges in the country.

In his memorandum to Parliament, President Kenyatta said the VAT on fuel, which had been postponed in 2016 for two years, would impair the Government's revenues if it was to be postponed for two more years to 2020.


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