Government seeks to raise
more revenue.
By Moses Michira
[email protected]
Milk and bread are among the basic
items whose prices will rise sharply in
July after enactment of planned broad
changes on taxation laws that also
touch companies.
Applying a uniform rate of 16 per cent
on all items would see the prices rise by
a similar margin.
A loaf of bread currently retailing at
Sh50, for instance, could climb to Sh58.
Poor households would be more
exposed in the amendments with
sweeping implications on many sectors,
as the State seeks to raise Sh1.75 trillion
in the next fi nancial year.
Most basic commodities are not
taxed to cushion the poor, but the
changes that will be proposed in the
national budget will end that.
“We are looking at exemptions on
several products that are widely consumed,
but not on VAT such as milk,
sugar, maize fl our, wheat fl our…,” said
Benson Korongo, a commissioner of
Kenya Revenue Authority.
He said the taxation review would
help in raising additional revenues but
could not immediately tell the amount
targeted from the changes.
Among the expected benefi ts of a uniform
taxation regime, according to
KRA, will be ease of application.
KRA’s target for the next fi nancial
year is 17 per cent over the near Sh1.5
trillion for the period ending June 30, a
huge jump whose attainment would
require tough measures.
The proposal must get approval of
the National Assembly.
National Treasury Cabinet Secretary
Henry Rotich will address the amendments
in his budget speech.
Unlike in the previous one, which was
friendly to consumers largely because
it fell in an election year, he would easily
introduce any changes now - regardless
of how the mwananchi will react.
Already, Mr Rotich has indicated that
cooking gas will also be subjected to
VAT, which was suspended in December
2016.
Consumer protection lobbies will
defi nitely rise to criticise the tax hike,
as it will a ect the poor more disproportionately.
“Applying VAT on all zero rates and
exempt items will mean a steep escalation
in the cost of living. This will in turn
shrink consumer spending,” said Stephen
Mutoro, the secretary general of
the Consumer Federation of Kenya.
He said the production-based budgeting
system had never worked for the
country.
“It is far cheaper to adopt austerity
measures by fi ghting corruption than
punishing consumers during every
budgeting cycle,” Mr Mutoro said,
warning that the measures could open
the fl oodgates to cheaper imports.
Slapping VAT on basic commodities
is only among the major amendments
to the taxation laws, coming after the
publishing of the Income Tax Bill that is
now undergoing public participation.
The public has been invited to give its
views on the draft legislation.
Mr Rotich is also targeting dividends
earned by3.6 million Kenyans who are
members of cooperative societies, raising
the tax two-fold to 10 per cent.
Fred Omondi, a tax partner at
Deloitte East Africa, cautioned that
while the measure aims at increasing
revenue collections, it could dampen
the savings culture among many Kenyans.
Profi ts realised from the sale of property
have been raised four-fold to 20
per cent, in one of the most aggressive
proposals. Rotich intends to start taxing
transactions done on digital platforms
such as the online shops that are popular
with millenials.
It is not clear, however, how he would
get his hand on the millions that are
transacted everyday, often without the
buyer and seller even meeting.
A new income tax band has also been
introduced for monthly incomes
exceeding Sh750,000, which will now
attract a 35 per cent rate.
Probe
MPs want answers over Sh3b project cost hike
MPs wantformer Kenya Airports
Authority (KAA) bosses to
explain how the cost of a project
was revised upwards fromSh4.1
billion toSh7.2 billion.
The National Assembly Public
Investment Committee yesterday
resolved to summon former acting
Managing Director Lucy
Mbugua (pictured) and the tendering
committee members to
explain the “illegal variation”
ofSh3.1 billion.
The committee said the variation
in cost of construction of
Terminal Four at the Jomo Kenyatta
International Airportand the
time it took for it to be completed
was unacceptable.
A report by Auditor General
Edward Ouko showed that the
variation was made without the
approval of the KAA board.
The committee, chaired by
Mvita MP Abdulswamad Nassir,
said the KAA management, then
under Ms Mbugua, had allowed
the variation first from
S h 4 , 147,6 7 7,000 to
Sh6,197,968,000 before finally
ending up at Sh7,223,666,000 - a
di erence of Sh3,075,989,000.
To worsen the matter, auditors
notifi ed the committee that some
works were incomplete, even
after the contractor was given a
clearance letter. “We…have a feeling
(that the variation) was done
after the project was delayed and
possibly the contractor allowed
to make claims for the lost time.
Besides Ms Mbugua we also want
to get details of the Chinese company
and their local agents,” said
Abdulswamad. [Moses Njagih]
10%
Withholding tax rate charged on
bonuses or dividends paid by sacco to
members. The tax is now 5% 15%
Presumptive tax for a single
business permit fee for turnover of
less than Sh5 million 16%
Value Added tax imposed on all
items previously exempted, including
unga, milk and sugar 20%
Capital Gains tax on sale of
property 35%
Higher corporate tax rate introduced
for companies. It is applicable
to taxable income in excess of Sh500
million 35%
Tax imposed on individual incomes
in excess of Sh750,000 per month
0
500
1000
1500
2000
2500
3000
2017/18 2018/19 2019/20 2020/21 2021/22
Projected ordinary revenue (taxes)
collections in billions
[email protected]
#Resist.
Really now and they couldn’t tell us why they themselves raised their pension by 700 percent.Pot bellied hyenas
RWNBP…as for the bread,refer to marie Antoinette
Austerity measures, I guess this applies to ordinary citizens only.
Mtu anipatie synopsis ya hii story is the govt planning to increase taxes or what?
They fleece us dry and give it all to NYS to enrich a few
Gluten- and lactose-intolerants are unbothered by these gimmicks.
Replace sugar with honey and you’ll be the one shafting the government.
Hata Baba yuko Jubilee… Sasa wewe ndio nani? Upinge kukamuliwa is a must.
The poor will wallow in even deeper poverty. In the last financial year, how many jobs have been created? Has the last budget’s cash been accounted for fully? Hayo matumbo yao watapeleka Pluto ama mbinguni?
Choices have consequences… Kenyans never learn… Acha tuumie until a revolution is ignited ndio mtajua hamjui
I can prophecy what happens next…
This will be a major discussion for one(few if any) days in our media houses. No one will give solutions just the daily mourns. The bitter guys will be online declaring how they don’t belong to kenya. Few will throw jabs in that twitter slum. Some bitter memes will come up. Ruto will be blamed. Probably uhuru and Odinga handshake but people will opt for the lesser. Ruto. Bitterness here in ktalk.
Then all will be quite. Like empty guns and heavy artilleries, calm! Steady calm. Smooth calm maybe but it will be calm. With a high toned saplano voice, a ghost voice will shout, “tushafishe macho!”
The lust and sexual age will rise. No one will remember the corruption deals. Stories will be told, " fish in a pussy" ," vera with otile" Everyone will be discussing at length the pussy and dick issues.
We are Africans, greedy full of pride son of bitches, arrogant to see their family members die of hunger etc etc and above all glorifiers of sex and gossip.
Time is ripe for a revolution