The National Assembly Finance Committee has confirmed that the adjustments to the Finance Bill 2024, expected to raise Sh320 billion in revenue, have not compromised budget financing.
Committee Chair Kimani Kuria revealed key amendments designed to bridge the deficit, including reductions in tax expenditures, a 1% increase in the railway development levy, and an increase in the import declaration form fee from 2% to 3%.
“On quantum, we have looked at other ways, such as assessing how much we are losing in terms of our tax expenditures. We have proposed marginal increases in some tax areas to bridge the resource gap,” Kuria explained.
Kuria emphasized that the Finance Bill 2024 aims to protect Kenyans’ livelihoods and address the high cost of living.
He noted that the Eco levy on imported goods is intended to discourage large-scale imports, thereby boosting local manufacturing and supporting small and medium enterprises (SMEs).
The proposed law targets a variety of items, including diapers, rubber tyres (for wheelbarrows and wheelchairs), batteries, pencil sharpeners, staplers, printers, calculators, photocopying machines, coin counters, and wrapping machines.
“We are transforming the Finance Bill from a revenue-raising measure to a policy-oriented bill addressing issues such as the cost of living and protecting those at the bottom of the economic pyramid,” the Molo MP stated.
The National Environment Management Authority has projected that the eco-levy will generate Sh54 billion.
The bill also introduces excise duties on imported table eggs, onions, and potatoes to protect local farmers.
The Finance Bill report was presented to the National Assembly this afternoon, with debates scheduled for Wednesday and Thursday, and a vote planned for June 25th.
The Opposition Coalition, Azimio La Umoja, has vowed to challenge the provisions of the Finance Bill 2024, which underpins the Sh3.9 trillion budget for the upcoming 2024/2025 financial year.
Azimio La Umoja argues that the eco-levy will increase the prices of essential commodities like bread and cooking oil, adversely affecting Kenyans.
Proposals on Finance Bill
President William Ruto has assured that the changes to the Finance Bill reflect the views of the public and other stakeholders gathered during public participation sessions. He commended Kenyans for their contributions.
“We will end up with a product in Parliament that originated from the Executive and has been thoroughly examined by the Legislature. Through public participation, the people of Kenya have had a say,” he said.
Significant amendments to the Finance Bill include the removal of the proposed 16% VAT on bread, transportation of sugar, financial services, and foreign exchange transactions, as well as the 2.5% Motor Vehicle Tax.
There will be no increase in mobile money transfer fees, and the excise duty on vegetable oil has been eliminated.
Levies on the Housing Fund and the proposed Social Health Insurance will not attract income tax, thereby benefiting employees financially.
The VAT registration threshold has been increased from KSh5 million to KSh8 million, exempting many small businesses from VAT registration.
The Kenya Revenue Authority’s electronic invoicing (ETIMS) requirement has been lifted for farmers and small businesses with a turnover below KSh1 million.
Additionally, the excise duty on alcoholic beverages will now be based on alcohol content rather than volume.
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