MPs, on Tuesday, June 22, rejected a raft of taxes proposed by Treasury CS Ukur Yatani arguing that they would pile more burden on Kenyans already grappling with a harsh economy.
In the draft amendments made to the Finance Bill 2021, they rejected the CS plan to raise Value Added Tax (VAT) without their input The CS lamented that seeking MPs' approval delayed the enforcement of tax changes.
Yatani suffered another blow after the lawmakers further rejected his proposed VAT taxes on bread, flour and a 15 percent tax on the purchase of motorcycles.
Gladys Wanga, the Chairperson National Assembly Finance Committee, lamented that bread is a basic commodity that shouldn't be taxed. Yatani had sought Parliament's nod to introduce a 16 percent Value Added Tax (VAT) on bread.
“As much as we want to raise funds to finance our budget, we should be livid about the fact that Kenyans are already struggling,” Wanga stated.
MPs agreed to maintain the price of bread. They also shot down Yatani's proposal to tax boda bodas stating that the sector has created lots of job opportunities, especially during the Covid-19 crisis.
Yatani's was pegged to the idea of charging boda boda buyers 15 percent for each newly purchased bike rather than the normal Ksh11,608 rate.
Another tax that was rejected was the Digital Service Tax (DST) which was to be imposed on digital services offered in Kenya. KRA was set to charge digital marketplaces 1.5 percent of the gross transactional value.
Expectant mothers were offered relief after the MPs proposed VAT exemption of all products relating to newborns.
The MPs further proposed reducing the excise duty on betting from 20 percent to 7.5 percent stating that the reintroduction of the 20 percent will affect gamblers and betting companies.
Kenyans were, nonetheless, cornered after the lawmakers rejected to exclude fees earned from 20 percent excise duty on loans.
Banks will thus pay over Ksh7 billion as tax yearly. However, loan seekers will carry the burden as banks argued that they will raise the cost of loans.
