Opposition leader Raila Odinga has called for a radical surgery to the punitive proposals in the Finance Bill, 2024 saying Kenyans cannot be subjected to another untold suffering in the new financial year.
Mr Odinga in an appeal to members of the National Assembly to cushion Kenyans from the punitive taxes, warned that the various proposals contained in the Bill risk collapsing the economy, which he said is already on its knees.
“Parliament must inject radical surgery on the outrageous proposals in the Finance Bill 2024. We will not accept the mistakes and pains inflicted on Kenyans by the Finance Act 2023 to be continued into 2025 through Finance Bill 2024,” Mr Odinga said in a statement to newsrooms.
“The people and the country will be worse off at this time in 2025 if the Finance Bill 2024 does not undergo a radical surgery,” added the ODM leader.
Mr Odinga regretted that businesses cannot thrive in the country if the tax policy keeps on changing like a swinging pendulum each financial year.
The former premier termed the Bill retrogressive as it will ruthlessly affect the poor as the cost of basic necessities such as food, cooking oil and money transfers is set to hurt them.
Among the proposals Mr Odinga has faulted include one that seeks to raise the fee on money transfer from 15 per cent to 20 per cent and the 16 Value Added Tax (VAT) on foreign exchange transactions.
“The government is trying to make it more costly for people to send and receive money by phone and at the same time trying to kill remittances from the diaspora,” Mr Odinga said.
Section 42 (b) (ii) of the Bill proposes to increase excise duty on money transfer services by banks, money transfer agencies and other financial service providers, cellular phone service providers or payment service providers licensed under the National Payment System Act, 2011 from 15 per cent to 20 per cent.
Stakeholders from the financial sector have warned that the increase in excise duty on these financial services would erode the progress made by the sector players in increasing financial inclusion in Kenya.
They expressed concern that both businesses and consumers will face higher transactional costs, leading to reduced access to financial services.
The Azimio la Umoja One Kenya Coalition leader has also raised issues with the proposal to tax bread at 16 per cent as opposed to the current situation where the commodity is zero-rated.
He notes that bread is a basic commodity for breakfast in most households and therefore should be made cheaper.
He says the cost of food including those served in kibandas and kiosks which normally serve millions of people such as casual workers is also likely to rise with the 25 per cent proposal of Excise Duty on edible oil.
“Most of the tax proposals in the Finance Bill are insensitive as they are callous,” Mr Odinga said.
Mr Odinga further criticised the proposal to increase the Import Declaration Fees from the current two percent to three percent saying it will result in the increase of cost of goods since Kenya is a net importer of most products.
The opposition leader also termed the proposed 2.5 per cent motor vehicle as punitive as it amounts to double taxation.
“A motor vehicle is one of the most taxed items in Kenya today. At least 40 per cent of the price of cars in Kenya are taxes. Vehicle owners are taxed for number plate fuel levy, tyres among others,” noted Mr Odinga.
He added, “The proposed 2.5 per cent tax is a perfect case of double taxation. It is unfair and regressive taxation.”
Section 9 of the Bill proposes to introduce Section 12H in the Income Tax Act that will introduce motor vehicle tax at the rate of 2.5 per cent on the value of the motor vehicle payable at the time of issuance of the insurance cover.
Mr Odinga censured the government for continuing to hit the poor with more taxes, pointing out that this year, it has proposed to levy taxation on products such as diapers through introduction of the Eco levy.
“It is a fact that the poor often have the most children in our country. Tax on diapers hits them in a place they have little alternative,” Mr Odinga said.
Mr Odinga’s opposition comes as the National Assembly Committee on Finance and National Planning continues to take views from the public on the Bill.
The majority of stakeholders that have appeared before the committee have since called for rejection of the Bill.
