For the better part of 2023, Kenyans, with different political leanings, united in lamenting over the continued increase in the cost of living.
According to the public, the number of jobs available in the market have continued to shrink while job security becomes rare, forcing some individuals to launch their own businesses in effort to make ends meet.
One concern dominating the cost of living debate has, however, been Ruto’s appetite for imposing a record number of taxes, significantly denting the payslip.
Here is a list of the taxes that were either introduced or significantly increased.
- Housing Levy
Beginning July 1, the government was at pains justifying a mandatory deduction of 1.5 per cent levy from all salaried Kenyans towards his Affordable Housing project.
The levy, which was to be matched by employers, went towards the National Housing Development Fund (NHDF).
The Finance Act, 2023 outlined that the fund would build affordable housing units for low-income Kenyans, especially those in urban areas.
The levy, which took effect beginning the 2023/2024 Financial Year, has, however, encountered legal headwinds including a recent High Court ruling that declared it illegal.
The Court, in a ruling to a suit filed by Busia Senator Okiya Omtatah, declared the deduction as unconstitutional. The State, thereafter, rushed to the Court of Appeal to contest the ruling.
- Social Fund Levy
The Head of State also sought to overhaul the National Hospital Insurance Fund (NHIF) by introducing 3 pieces of legislation; The Social Health Insurance Act, Primary Health Care Act, and the Digital and Digital Health Act.
The Acts, which were assented to law were conceived to help the government achieve Universal Health Coverage in line with the Head of State's legacy plan.
The Social Health Insurance Act seeks to split the National Health Insurance Fund (NHIF) into three funds namely the Primary Health Care Fund, the Social Health Insurance Fund, and the Chronic Illness and Emergency Fund.
The fund proposes a 1.5 per cent levy from salaried individuals and a reduction in contributions from unemployed Kenyans to Ksh300.
The Kenya Medical Practitioners, Pharmacists & Dentists Union (KMPDU), however, moved to court and applied to have the Acts suspended citing negative effects on the larger health sector.
The Court has since issued orders halting the implementation of the Acts until February 2024.
- Export and Investment Promotion Levy
President William Ruto also proposed an increase in the Export and Investment Promotion Levy (EIPL) on all imported goods in an effort to promote local manufacturing.
Only goods sourced from countries within the East African Community will be exempted from the tax.
The EIPL will be levied at a rate of 10 per cent on the customs value of the imported goods.
The EIPL is expected to generate Ksh 10 billion in revenue that would be used to fund the National Housing Development Fund (NHDF) and the Kenya Industrial Transformation Plan (KITP).
However, the Kenya Association of Manufacturers (KMA) rejected the proposed amendment and the introduction of the Export and Investment Promotion Levy arguing that it would push up the cost of manufacturing Kenyan-made products.
- Expanded PAYE for those earning Ksh800,000 and above
The Finance Act, 2023 expanded the Pay As You Earn (PAYE) so that those earning Ksh 800,000 and above would pay 35 per cent as Pay As You Earn (PAYE).
This means that Kenyans earning Ksh800,000 and above will pay PAYE on their entire income, an increase from the previous 30 per cent.
The initial expansion was pegged on monthly incomes starting from Ksh500,000, but Members of Parliament reviewed it to Ksh800,000, technically, excluding themselves from the increased PAYE bracket.
- Increase in Turnover Tax
President William Ruto controversially, introduced the Turnover Tax (TOT) levied on all businesses in Kenya at a rate of 3 per cent whether a business made a profit or not.
Initially, the levy was charged at a rate of 1 per cent. It affects businesses with a turnover of Ksh1 million or more.
- 16 Per Cent VAT on Petroleum Products
The Finance Act, 2023 doubled the Value Added Tax (VAT) on petroleum products from 8 to 16 per cent, to the chagrin of consumers.
The increase pushed Kenyans to pay more for fuel, which had a knock-on effect on the cost of transportation, food, and other goods and services.
All the three types of fuel, petrol, diesel and kerosene, crossed the Ksh200 mark per litre.
The government argued that the VAT hike would contribute to an increase in revenue that will fund development projects as the government moves away from overreliance on foreign loans.
