NAIROBI (Reuters) – Kenya’s government has proposed a finance bill for the coming fiscal year that will increase various taxes and introduce new ones, drawing sharp criticism from political opponents, civil servants and industry groups.
The national assembly debated the bill on Tuesday, which it will consider alongside the 2023-24 (July-June) budget to be presented by the finance minister on Thursday.
Here are the key provisions in the bill:
* The bill’s most contentious measure proposes the compulsory deduction of 3% of every employee’s monthly wages, matched by the employer, towards a National Housing Development Fund.
The government says the levy, which is capped at 5,000 shillings ($35.89) for both employees and employers, will be used to build affordable houses for low-income people, offering them dignity while creating jobs for young people.
Critics say it amounts to forced savings which will further erode consumers’ purchasing power.
* The bill seeks to double the value-added tax on fuel to 16%. Opponents of the bill say that will drive up retail costs of petrol and, in turn, increase prices for already expensive goods and services.
Attempts by the previous administration to raise the tax led to protests that forced the government to withdraw the measure.
* The bill proposes a new withholding tax for digital content creators and online influencers at 15%.
The government argues it needs to broaden the tax base by capturing emerging industries like online work. Opponents say it will be detrimental to the nascent digital economy.
The bill also wants to tax the transfer of cryptocurrency and non-fungible tokens at 3%, a measure that has been opposed by one of the world’s biggest crypto exchanges, Binance.
* The bill will raise the top personal income rate to 35% from 30%. The measure targets those with a monthly income of more than 500,000 shillings ($3,600).
The opposition has called the move discriminatory and said it would hurt the economy by depressing consumer spending.
* The bill removes taxes on helicopters and aircrafts, and cuts the tax rate on rental income from 10% to 7.5%. Critics say these measures favour the wealthy, although tax experts have said they could spur tourism and air travel.
($1 = 139.5000 Kenyan shillings)
(Reporting by Duncan Miriri, editing by Ed Osmond)
