President William Ruto is under pressure to raise revenue to finance the 2023/24 Budget, especially with the Finance Act, 2023 tittering on the brink of collapse.
According to an IMF staff country report seen by Kenyans.co.ke, the National Treasury is gearing up to lump more taxes on Kenyans just months after coming under heavy scrutiny for bulldozing the Finance Act, 2023.
The document shows that the government is contemplating adopting a motor vehicle circulation tax, a proposal which is likely to face stiff resistance from players in the automobile industry.
The motor vehicle circulation tax proposal could result in the adoption of toll station fees and taxes based on engine size, weight, and age of the vehicle.
The government also indicated that it was also ready to cut down on expenditure for non-essential items if push came to shove.
As per the 120 paged document, the new measures could be introduced in October during the tabling of the supplementary budget.
The government is also mooting reducing tax exemptions on interest income.
"Should the approved 2023 Finance Bill result in a weakening of the revenue package (1.6 per cent of GDP) underpinning the Budget proposal and/or FY2022/23 tax underperformance be larger than anticipated at the time of the submission of Supplementary II FY2022/23 Budget, we will take a number of corrective tax measures," IMF quoted the Treasury.
"These measures could include streamlining by end-July 2023 the VAT apportionment ratio of allowable inputs VAT on exempt supplies to align it with international practices and reduce VAT exemptions," the document further states.
The success of the Finance Act 2023 is still in doubt following its suspension by High Court pending hearing and determination of the matter.
The High Court ruling came hot on the heels of a petition filed by Busia Senator Okiya Omtatah challenging various tax proposals in the Act.
Some of the contentious proposals included the decision to increase the fuel tax from 8 per cent to 16 per cent and introducing a 1.5 Housing Fund tax among other proposals.
The revelation that the government is looking at piling more taxes on Kenyans has already caused uproar with Azimio la Umoja calling on Kenyans to make their voices heard in the ongoing anti-government protests.
"We have stood as one against the Finance Bill. Kenya Kwanza now plans to raise VAT as punishment. Let's show our strength in even greater numbers today. We won't let their VAT increase plan see the light of day," Azimio stated.
Treasury submitted its proposals to IMF when it sought a Ksh142 billion loan from the Bretton Wood institution.
The loan has since been approved.
