The cost of internet, phone calls and gambling is set to rise as the National Treasury has proposed amendments to excise laws in a bid to raise additional revenue.
The Treasury has proposed to increase the excise tax on internet and phone calls from the current 15 percent to 20 percent, setting the stage for an upward revision in the prices telecom companies charge for these services.
Airtel Kenya currently charges Sh2.93 per minute for all calls, including those to other networks. Safaricom, meanwhile, has an off-peak rate of Sh2.5 and a peak rate of Sh4.87 for voice calls, according to its website.
Excise duty on amounts wagered or staked in betting, gaming and lotteries will increase from the current 12.5 percent to 15 percent, a move that will see the Kenya Revenue Authority collect more from punters.
“Additionally, it is proposed to revise the excise duty on excisable services such as telephone and internet data services at 20 percent; and betting, gaming, prize competitions and lotteries at 15 percent,” the Treasury said of the Proposed Tax Laws (Amendment) Bill, 2024.
The bill had also sought to raise excise duty on calls and internet services to 20 percent. Excise duty on betting was to be increased to a higher rate of 20 percent in the Bill, but is now proposed to be set at 15 percent in the tax changes.
The proposals, if passed, will result in a further erosion of consumers' purchasing power and a potential slowdown in revenues for both telecommunications service providers and betting companies.
Last month, formal sector employees began paying 2.75 percent of their gross monthly salary into the Social Health Insurance Fund (SHIF).
The Treasury has traditionally targeted the telecommunications and betting sectors, among others, which provide popular services used by millions of consumers.
The excise duty on these services has been modified over the years, with the rate on calls and internet set to return to 20 percent in the fiscal year ending June 2023.
Gambling activities previously attracted an excise duty of 7.5 percent. The Treasury has said the increased taxation on betting is aimed at discouraging the phenomenon, which is popular with Kenyans wagering more than Sh150 billion annually, according to previous figures.
The government remains under pressure from the International Monetary Fund (IMF) to raise additional revenue as part of its commitments to access funding from the Washington-based institution.
“Given the elevated risks around the fiscal strategy, policymaking needs to be agile. Contingency planning remains critical, with policies adapting to evolving outcomes to safeguard stability and ensure that programme objectives continue to be met,” the IMF said on Wednesday when it disbursed $606 million (Sh78.1 billion) to Kenya.
The Finance Bill, 2024 was expected to raise an additional Sh346 billion. The Treasury's new proposal is also expected to significantly boost public coffers, but the scale of the additional revenue is yet to be computed.
