President Uhuru Kenyatta signs the Division of Revenue Bill, 2021 into law at State House, Nairobi, on April 30, 2021. PHOTO | PSCU President Uhuru Kenyatta holds the key to the enforcement of new taxes that could make bank loans, Internet access and mobile phone calls costlier from tomorrow.
The President has the option to back or reject the new taxes that MPs introduced in the government-backed Finance Bill after Parliament forwarded the Bill to State House for approval.
MPs increased excise duty on airtime and data from 15 percent to 20 percent, which will see the Treasury raise at least Sh8 billion from Safaricom , Airtel and Telkom Kenya.
This proposal was not in the Finance Bill and it remains to be seen whether the President will back the airtime tax despite the levy missing from the Treasury’s plans.
The 2021-22 financial year’s budget is expected to cement the legacy of Mr Kenyatta’s 10 years in office in a tough economic setting clouded with depressed corporate and household earnings amid uncertainties arising from the Covid-19 pandemic.
Parliament rejected the Treasury’s proposal to change the way tax on bread is calculated in a shift that would have seen bakers stopped from seeking refunds from raw materials such as electricity that attract VAT.
This could have led to an increase in bread prices and pushed it out of reach of a majority of households that are grappling with Covid-19 economic hardships.
But MPs backed the Treasury’s bid to reintroduce the 16 percent VAT on cooking gas and a 20 percent excise tax on the fees and commissions earned on loans.
This means households will from tomorrow pay at least Sh350 more for the 13-kilogramme cooking gas, adding to the pain of costly energy such as petrol and electricity.
The excise duty on bank loan fees will see banks pay the taxman more than Sh7 billion annually, which risks making credit costly for homes and businesses as lenders transfer the burden to borrowers.
The approval by Parliament followed its review of the Finance Bill, which contains taxation measures for the new financial year starting July.This now shifts the focus on President Kenyatta, whose final signature is needed to give amendments to the Finance Bill, 2021 legal force.The Treasury is targeting about Sh2.04 trillion in total revenue compared with Sh1.83 trillion estimates for the current year ending this month, according to the Budget and Appropriations Committee report.Ordinary revenue streams for the Treasury […]
