Kenyans have been urged to brace themselves for higher taxes after the Government yielded to the International Monetary Fund’s demands.
Treasury, through recommendations by the IMF, agreed to a repeal of some tax exemptions enjoyed by key sectors of the economy.
The government made a commitment to the IMF, in a letter of intent, that pointed out a heap of measures that will likely put a strain consumers’ pockets.
One of the conditions accepted by the Government is the removal of some tax exemptions that will weigh on some sectors of the economy.
[caption caption="Treasury CS Henry Rotich"][/caption]
Sectors expected to be hit include agriculture, manufacturing, education, health, tourism, finance, social work, and energy additionally a tax haven for milk, maize flour, and sugar will come to an end in the next financial year.
Treasury indicated that petroleum products, which had been exempted from the consumption tax, will attract 16 per cent VAT beginning September in a move aimed at complying with a deal Kenya made with IMF in 2015.
The Treasury stated they expected to get an extra Sh17 Billion from taxes on petroleum products.
Additionally, Treasury expects to get an extra Sh40 Billion in taxes from these sectors and this will likely have an effect by pushing up the cost of goods and services currently enjoyed at a discounted level.
The National Treasury and the Central Bank of Kenya have promised the IMF to either remove or modify interest rate caps and delay the implementation of some development projects as a condition to access IMF’s Sh150 Billion precautionary loan known as the standby arrangement (SBA).
[caption caption="Kenyans to brace themselves for tough economic times"][/caption]
Kenya has been granted a six-month extension on the standby arrangement to work on the IMF-driven proposals and be allowed to access the credit facility should the economy suffer an external shock.
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