Kenyans are set to smile all the way to the bank for cheaper loans after Treasury CS Ukur Yatani scrapped 20 percent tax imposed on banks.
A report by Business Daily on Thursday, May 6, indicated that Yattani had made the proposal to drop the excise duty tax in the Finance Bill 2021 he forwarded to Parliament for approval.
The proposal is set to drop credit charges immensely which had been imposed on the banks' loan facility in 2018 in an attempt to fix the budget deficit.
Banks are set to save as much as Ksh7 billion every year if the proposal is dropped hence easing the pressure on lenders to raise loans.Treasury CS Ukur Yatani addresses the media on November 25, 2020, in Nairobi
Since the introduction of the tax, loans rose through the roof affecting banking services such as loans, transfers, over-the-counter withdrawals as well as ATM transactions and account operating fees.
The high cost of loans has also been blamed for the rise of shylocks and unregulated digital loans applications.
“The first schedule to the Excise Tax Act, 2015 is amended in part three, in the definition of ‘other fees’ by deleting the word ‘fees or commissions’ earned in respect of a loan,” read the proposal in part.
Industry stakeholder and players welcomed the move noting that with the pressure to raise lending rates off, they would be obliged to transfer the benefit to consumers.
“If the tax is removed, then most likely we will pass this to customers. Most banks will reduce the fees charged on loans,” he said.
In the same bill, the CS proposed raising betting taxes to 20 percent of the amount staked in an attempt to raise billions in revenue to finance this financial year's budget.
The charge had been introduced in 2019 but it was reviewed downwards in 2020. Yatani, at the time, vowed to return it back up.
“Excise duty on betting shall be twenty percent of the amount wagered or staked,” read the document.
The rise is aimed at control the negative effects betting can bring on society with the youth being the most affected demographic.
“Following various consultations and in line with the government’s commitment on mitigating against the social vices associated with betting activities, the National Treasury and Planning will be proposing to the National Assembly, the reintroduction of the excise duty on betting within the next six months,” stated Yattani in a previous interview.File image of a punter analysing oddsFile
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