Kenyans seem to have a trance-like romantic affair with their mobile phones such that they barely notice a pronounced bump in the price of calling and browsing.
It is a blissful ignorance that the government has greedily exploited.
In the last decade, the National Treasury has gradually been turning up the excise duty (sin tax) knob on airtime and internet services, which are critical for the nascent digital economy that the government is banking on for growth.
Never mind that unlike drinking beer (or even soda) and smoking cigarettes, one does not sin by calling a friend or sending money to a relative in need. READ MORE
Nikhil Hira, a tax expert, said Treasury has a penchant for using excise duty to raise revenues.
“Excise duty over the years used to be called sin-tax because it would be on alcohol, cigarettes… things that society felt we shouldn’t be using,” said Hira.
But even as the government has raised taxes on telephone and internet services, it has fobbed off Wanjiku with lower taxes on bread, maize flour, wheat flour and cassava flour.
These items, as essential as they are, no longer take a big chunk of Kenyan households’ budget as airtime and financial transactions.
Last week, MPs removed the 16 per cent value-added tax (VAT), or consumption tax, on bread, maize flour, wheat flour, and cassava flour, a move that was hailed as being pro-Wanjiku.
But the taxpayer might have been the loser. As one MP who sits in the Finance Committee and who did not want their name revealed due to the sensitivity of the issue put it, the National Treasury might end up raising even more revenues with the new changes.
Even as they removed VAT on these basic commodities, they cranked up excise duty on telephone and internet services to 20 per cent from the current 15 per cent.With this, Kenya will join Gabon as one of the African countries with the highest taxes on airtime at 36 per cent, if you include the 16 per cent value-added tax (VAT) that is also levied on the item.The Internet services apply even to fixed data subscription, although many Kenyans, about 40.9 million as of the end of June, according to the Communications Authority of Kenya, use mobile data for browsing. Most of this data is bought using airtime.“Because they have taken huge loans and so they have to keep looking for anything to tax. The river takes […]
