Taxes to increase as Finance Bill introduces new charges

Tuesday, April 12th, 2022 06:00 | By
Treasury Cabinet Secretary Ukur Yatani at a past event. PHOTO/File

Kenyans should brace themselves for tougher taxes contained in the Finance Bill, which will be tabled in the National Assembly this afternoon for its first reading.

The Bill seeks to amend taxes on key products including motorbikes and also make it mandatory for riders to pay for a Third-Party insurance policy.

Bill proposes to amend the Statutory Instruments Act, 2013, to provide for the exemption of statutory instruments legislated under various tax laws from automatic expiry.

It will be double taxation on boda boda riders as the National Treasury proposes to increase the excise duty charged on a motorcycle from Sh12,185 to  Sh13,403.64 per unit.

Cosmetic and beauty products, as well as jewellery items, will have excise duty raised from 10 to 15 per cent.

A charge of Sh6.60 per litre of bottled water will also be imposed up from Sh6.03.

Kenya Revenue Authority has over the years protested that it has been facing difficulties to collect taxes from the sector following wanton cheating.

Those who partake in alcoholic drinks including beer and wines and spirits will have to cough more as Treasury seeks to heavily tax them.

Manufacturers had last year protested that the products were over-taxed leaving no room for additional levies.

Items that include beer, cider, perry, mead, opaque beer, and mixtures of fermented beverages with non-alcoholic beverages and spirituous beverages of an alcoholic strength will attract excise duty not exceeding six per cent of Sh134 per litre, up from the current Sh121.85.

Spirits, liquors and other spirituous beverages with an alcoholic strength exceeding six per cent will attract an Sh335.30 per cent excise duty per litre up from Sh278.70.

Tougher times

Wines will also attract a much higher tax of Sh229 per litre up from Sh208.20.

Bill also seeks to introduce a 15 per cent excise duty on fees charged on advertisements by television stations, print media,  billboards and FM radio stations on alcoholic beverages, betting, gaming, lottery and prize competitions. Also to be included in the excise duty blanket will be fertilized eggs and imported hatcheries.

The transport sector is also set for tougher times as the Treasury seeks to include a 15 per cent excise duty on public service vehicles manufactured locally. Most buses that operate PSVs are manufactured in the country.

Bill states that buses manufactured in the country and whose total value comprises at least 30 per cent of parts designed or made locally will be included in the excise duty blanket.

And to cushion potato farmers, the National Treasury is proposing to slap excise duty on imported potatoes.

Early this year, there was an uproar after it emerged that potatoes sold by foreign-owned eateries are imported.

Also set for a tax increase will be pharmaceutical products, which will be slapped with an excise duty of 15 per cent.

Treasury is seeking to raise an additional Sh50.4 billion to service the Sh3.3 trillion presented in Parliament last week by Cabinet Secretary Ukur Yatani.

The Bill proposes to amend sections 10(4) and (8) of the Insurance Act to align the section with section 21A of the Act, to include the motorcycles.

Bill that has since elicited opposition by Deputy President William Ruto and his allies also seeks to amend the Evidence Act (Cap. 80).

Bill to be tabled by the Finance and Trade Committee chairperson Gladys Wanga, proposes to amend section 133 of the Evidence Act to accommodate all officers involved in administering tax laws as set out in the First Schedule of the Kenya Revenue Act.

Advisory charges

It also seeks to amend the Capital Markets Act to address the shortage of investment advisory services being experienced across the country due to the restrictive nature of the Act, by expanding the spectrum of persons who may act as investment advisors in offering the much-needed investment advisory services.

It further seeks to amend the Unclaimed Assets Act, 2011 to introduce capping penalties and interest to the value of assets found to be reportable and deliverable.

“This is meant to address cases where the asset may increase beyond the value of the asset thus discouraging compliance to avoid penalties,” the Bill.

Urging MPs allied with him to shoot down the Finance Bill, Ruto said the Sh3.31 trillion Budget was not people-friendly but will end up increasing the cost of living.

The DP warned that should the government forces through the budget, he will alter it should he win the August 9 election.

“You know the Budget was read recently and it seeks to increase the cost of basic commodities such as water, bread, maize flour, and motorcycles. We want to tell them that it won’t be passed in Parliament and if it does, we will overturn it after three months,” Ruto said in Limuru on Sunday.

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