Winners and losers in Yatani’s budget
Published on: June 10, 2021 07:35 (EAT)
Expect greater bread and motorcycle costs after the fronting of new taxes by Treasury Cabinet Secretary Ukur Yatani in his budget statement on Thursday. While new tax proposals were already revealed in the 2021 Finance Bill, the exchequer ministry highlighted new amendments to various laws which are expected to yield Ksh.8.7 billion in new taxes every year. The losers The VAT treatment of bread is for instance expected to move from the zero rated category to exempt, denying bakers the opportunity to claim input VAT forcing them to pass the cost to consumers. At the same time, the excise duty on imported motorcycles is set to transition from a flat rate of Ksh.11,608.23 to a rate of 15 per cent, which will raise the cost of units popularly known as bodabodas from July 1, if effected by Parliament. The sin industry once again fell victim to a fresh round of taxes with Treasury for instance pushing for the return of excise duty on waged amounts in betting at the rate of 20 per cent. “The removal of this tax generated a lot of public debate considering that betting has become widespread in our society resulting in negative social effects,” Yatani noted. Similarly, alternative tobacco products such as nicotine pouches which were outside the scope of taxation will attract excise duty at the rate of Ksh.5000 per kilogram. Other commodities targeted for excise duty include jewelry and locally manufactured sugar confectionery. Other areas targeted for taxation include earnings from fees and commissions on loans by commercial banks. Winners Producers and suppliers of medical equipment leads the list of winners from the budget with Treasury recommending the exemption of COVID-19 related medical supplies from value added tax (VAT). This to include items such as ventilators, electro-diagonistic apparatus, physiotherapy accessories and breathing appliances such as gas masks and protective masks. “It is my hope that the suppliers of these medicament and 93 medical equipment will reciprocate by making their prices affordable,” Yatani said. Importers of glass bottles will also mark gains from the budget after their exemption from excise duty. Informants on tax matters with also derive benefit from the 2021 budget statement with Yatani pushing for raise of the reward offered by the Kenya Revenue Authority (KRA) to a maximum of Ksh.5 million from the current Ksh.2 million. The tax man is also in on the gains as Treasury proposes to hand it more power in the administration of tax including a greater seven year period to peruse through taxpayers documentation. Some stakeholders however sit on the fence having both been gainers and losers from the budget. For instance, while residents are now exempt from digital services tax (DST), the stakeholders will be required to charge VAT on suppliers sold in the online space.