Relief as MPs shoot down new taxes on unga, boda bodas

Kenyans can now breathe a sigh of relief following the rejection of taxes touching on key commodities by Members of Parliament (MPs).

In its consideration of the 2022 Finance Bill, the Finance and National Planning Committee of the National Assembly which is led by Gladys Wanga rejected the introduction of VAT on maize, cassava and wheat flour.

The National Treasury had proposed the deletion of the three commodities from the tax exempt list, which would have seen the goods subjected to VAT at the rate of 16 per cent.

“The committee observed that the amendment will increase the price of maize flour, cassava and wheat flour,” the Wanga-led team noted.

At the same time, the committee backed the reduction of the rate of VAT on LPG from the current 16 per cent to 8 per cent on the back of price increases for the commodity.

Moreover, the committee rejected an increase in the rate of excise duty for imported motorcycles saying such a move would lead to an increase in the price of boda bodas, which are a source of employment for many people.

It also proposed the retention of the rate of excise duty on beers, wines and spirits. The rate of excise duty on the three sets of alcoholic beverages has been proposed to hold at Ksh.121.85, Ksh.208.20 and Ksh.278.70 per litre respectively.

Punters are also winners in the consideration of the money bill as the committee backed the hold of the rate of excise duty on wagered amounts at 7.5 per cent from the proposed 20 per cent.

The committee further rejected the introduction of duty at the rate of 15 per cent for advertisements on betting and gaming competitions, insisting that such ads are regulated through other pieces of legislation.

Locally manufactured ice-cream and chocolate has also been exempted from excise duty.

Additional recommendations by the Finance Committee have shot down the requirement for tax payers to deposit 50 per cent of disputed tax revenues while appealing decisions by the Tax Tribunal, with members noting that the proposal would harm the working capital of businesses.

Further, the rate of digital services tax (DST) has been retained at 1.5 per cent from the proposed three per cent.

Nevertheless, the committee adopted some of the proposals by Treasury including higher duty on nicotine products and the introduction of excise duty on nicotine alternatives.

The recommendations by the committee are set to be considered by the National Assembly on Wednesday as the 2022 Finance Bill enters the second reading stage.

If adopted, the recommendations will form part of the 2022 Finance Act which is to be approved by the House later next month.

The rejection of the controversial tax proposals is expected to reduce new revenue nettings for the exchequer.

The National Treasury had been banking on the sum of proposals to raise Ksh.51.6 billion in additional revenues across the 2022-2023 fiscal year.