In a significant move to address public concerns and enhance the economic landscape, the Kenya Kwanza government has announced a series of amendments to the Finance Bill 2024. These changes were outlined during a Parliamentary Group meeting at State House on June 18, 2024, and are aimed at easing the financial burden on citizens while promoting local manufacturing and job creation. Here are the key highlights and contentious issues:
Key Amendments
- VAT Adjustments:
- 16% VAT on bread: Removed.
- VAT on transportation of sugar: Removed.
- VAT on financial services and foreign exchange transactions: Removed.
- Mobile money transfer: No increase in charges.
- Motor Vehicle and Excise Duties:
- 2.5% Motor Vehicle Tax: Removed.
- Excise duty on vegetable oil: Removed.
- Excise duty on alcoholic beverages: Now based on alcohol content rather than volume.
- Income Tax and Levies:
- Housing Fund and Social Health Insurance levies: Now income tax-deductible.
- VAT registration threshold: Increased from KSh 5 million to KSh 8 million, exempting more small businesses from VAT.
- Eco Levy:
- Applied only to imported finished products, not locally manufactured ones.
- Exemptions for locally produced sanitary towels, diapers, phones, computers, tyres, and motorcycles.
- Agricultural and Local Production Support:
- Excise duty on imported table eggs, onions, and potatoes: Imposed to protect local farmers.
- Teacher Employment and Internships:
- KSh 18 billion allocated for hiring 46,000 Junior Secondary teachers currently on internship.
- An additional 20,000 interns to be hired next month, with a policy to transition them to permanent and pensionable terms.
Contentious Issues and Public Reaction
Despite these amendments, several contentious issues have sparked public outcry:
- High Cost of Living: Many Kenyans continue to demand the complete withdrawal of the bill, citing that the cost of living remains high.
- Eco Levy Concerns: Skepticism about the implementation of the Eco Levy and its actual impact on citizens persists.
- Excise Duty on Alcohol: Concerns remain about the effect of the new taxation method on alcohol prices and consumption patterns.
- Small Business Impact: Although the VAT threshold increase benefits small businesses, the overall tax landscape still poses challenges for entrepreneurs.
Benefits of the Amended Bill
- Boost to Local Manufacturing: Exempting locally manufactured products from the Eco Levy and providing tax breaks for agricultural products is expected to stimulate local production and job creation.
- Relief for Employees: Making housing and health insurance levies tax-deductible is a significant relief for employees, potentially increasing their disposable income.
- Support for Education: Allocating funds for teacher employment underscores the government’s commitment to improving education by addressing teacher shortages in junior secondary schools.
In conclusion, the Kenya Kwanza government’s amendments to the Finance Bill 2024 reflect an effort to balance fiscal policy with public concerns. While these changes address several critical issues, ongoing public discourse and parliamentary discussions will determine the final shape of the bill.
