The Finance Committee of Parliament declined a proposal by manufacturers to delete the proposal on increasing the Import declaration fee from 2.5 per cent to 3 per cent enshrined in the 2024 Finance Bill.
In the report tabled by the committee, it was cited that the import declaration fee would remain at 3 per cent as proposed by the Bill to cushion the government against possible revenue losses.
The Kenya National Chamber of Commerce (KNNCI), had fronted the proposal for the deletion of the clause in the 2024 bill under the premise that it would increase the cost of raw materials.
Further, the Chamber warned the government that an increase in the levy would warrant an increase in manufacturing costs and eventually in the cost of goods sold to the consumers.
“Delete the proposal because it will result in an increase in the cost of imported raw materials which will further increase the cost of finished goods making it unaffordable to Kenyans,” stated KNNCI.
Within the report, however, the committee cited that the reduction of the fee in the 2023 Finance Act cost the government Ksh10 Billion in revenues.
“The Committee did not agree with the proposal noting that the reduction of the rate of import declaration fee from 3.5% to 2.5% in the Finance Act, 2023 occasioned a significant revenue loss amounting to at least Ksh. 10 billion, hence hurting the implementation of the FY2023/24 budget,” stated the report.
Further, the committee stated that the implementation was key to restoring the performance of the tax head in line with projected budget estimates for FY2024/25.
However, proponents of the bill have continued to state that the imposition and increase of the bill is aimed at favouring local manufacturers.
According to legislators in favour of the bill, the upholding of the levies on imports will also trickle down to promoting local employment.
However, KNNCI has reiterated that some proposals retained by the Finance Committee will negatively affect the economy and some still contain grey areas.
Additionally, the Chamber stated that the creation of yearly regulations affected the predictability of the business environment in the country.
