24 September 2018

Kenya: Henry Rotich Defends Controversial Tax Law Amid Outcry

Photo: Evans Habil/Nairobi News
Activist Okiya Omtatah at Milimani Law Court.

Treasury Cabinet Secretary Henry Rotich has defended the government's move to sign into law the controversial Finance Bill, 2018 which has caused public outcry.

Mr Rotich on Sunday said there was no option but for the bill to be passed for Kenya to raise enough revenue to fund the budget and run the country.

"The passage of the Bill gives us the platform to implement the budget. Hadn't Parliament passed the bill, we would not be in a position to raise revenue. We will do it in a manner that will not hurt Kenyans," Mr Rotich said in an interview with Nation.

He disclosed that with the passage of eight percent VAT on petroleum products combined with other revenue collection measures, the government expects to raise Sh48 billion, adding that Kenya's debt currently stands at 5.8 percent of the Gross Domestic Product, which translates to Sh560 billion.

"Kenya's debt remains sustainable. We have a fiscal plan in the next three years and we look forward to the debt coming down," he said after attending the opening of Our Lady of Sorrows Catholic, Koptega Parish, in Elgeyo-Marakwet County.

CORRUPTION

President Uhuru Kenyatta signed the bill after MPs on Thursday last week backed his recommendations on the Finance Bill.

"I have signed into law the Finance Bill, 2018. I give my commitment that I will ensure proper utilisation of public resources for a better Kenya. I will not relent in the war against corruption," President Kenyatta said on twitter.

Further, Mr Rotich maintained that the government had no option but to pass the bill following the promulgation of the 2010 Constitution.

"This has seen an expanded Parliament and Senate, which require a lot of money. It also came up with 13 constitutional offices. As the government, we've no option but to implement the law. This has not been easy as it requires money," he explained.

He said the creation of the 47 counties has also eaten a big budget, adding that more than Sh1 trillion has already been disbursed to the counties and other constitutional offices since 2013.

DEVELOPMENT

Mr Rotich said more than 6,000 kilometres of roads are currently under construction in the country not to mention the ongoing power connectivity.

He, however cautioned traders against increasing the cost of basic commodities, which he said will hurt common mwananchi even more.

"Tulipe ushuru tujitegemee (lets pay tax to be self-reliant). We have to get tax to have good roads and for Kenyans to enjoy vital government services. We cannot approve a budget which has not been funded," Mr Rotich said, adding that the government is committed to ensuring prudent utilisation of public funds.

Elgeyo-Marakwet Governor Alex Tolgos told off those calling for the removal of Mr Rotich from office.

"Before you tell Mr Rotich to resign, show us what you have done. As governors we're happy with what Treasury has done to boost infrastructure at the grassroots. You (Rotich) are not a politician but you havee to learn to defend yourself usinyongwe (lest you are strangled)," Governor Tolgos said.

BIG FOUR AGENDA

The passage of the Finance Bill gives the President the legal mandate to levy the new taxes that he hopes will raise the Sh130 billion he needs to keep his spending plans on track.

The State intends to raise Sh17.5 billion from eight percent VAT on petroleum products, Sh9.8 billion from the "kerosene adulteration" tax while imposition of Sh20 per kilogramme of sugar confectionery, including white chocolate, will raise Sh473 million.

The President has also succeeded in pushing through the 1.5 percent levy for the National Housing Development Fund that is expected to generate about Sh57 billion a year.

Under the Housing Development Fund plan, an employer and employee are separately required to contribute 1.5 per cent of the monthly basic salary so long as the sum of the employer and the employee contributions does not exceed Sh5,000.

The President also expects to raise Sh20.2 billion from the 12 percent excise duty on fees charged for mobile money transfer services, the 15 percent excise duty on telephone and internet data services and the 20 percent duty on fees charged for money transfer services.

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