Nairobi — The government is set to incur a revenue shortfall of Sh5 billion after the removal of the Eco Levy in the proposed Finance Bill 2024.
According to Kuria Kimani, chairperson of the National Assembly Finance and Planning Committee, the Kenya Kwanza government was targeting collecting Sh10 billion as part of its revenue from the Eco Levy, as earlier proposed in the controversial Bill.
The new tax targeted manufacturers and importers of selected 18 products, including plastic packaging, car batteries, diapers, sanitary towels, and rubber tyres.
"The revenue we were targeting from the eco levy for both locally manufactured and imported products was Sh10 billion, so that means that we are going to have a revenue gap of Sh5 billion," said Kimani.
The National Assembly Finance and Planning Committee confirmed that the recent tax concessions made in the proposed Finance Bill 2024 during the Kenya Kwanza Parliamentary Group meeting chaired by President William Ruto in State House Nairobi on Tuesday will cause revenue gaps in the Sh3.99 trillion budget for Financial Year 2024/25.
The National Treasury had proposed several tax measures in the Finance Bill 2024, targeting more revenue from tax payers to finance the huge budget amounting to Sh3.99 trillion.
"The process of budget making is a continuous engagement and the several amendments recommended in the Bill will definitely have a financial implication on the expected revenue collection," urged Kuria.
The state dropped various tax measures proposed in the contentious bill, including 16 percent VAT on bread, excise duty on vegetable oil, VAT on the transportation of sugar, and 2.5 percent motor vehicle tax.
It also scrapped Eco Levy on locally manufactured products including sanitary towels, diapers, phones, computers, tyres, and motorcycles, as well as an increase in taxation on mobile money transfer transactions, VAT on financial services, and foreign exchange transactions.
Additionally, excise duty on alcoholic beverages will be based on alcohol content, not volume, in order to attract more duty.
