How Finance Bill 2023 will affect women
A woman sells potatoes outside Machakos Country bus terminus in Nairobi. Some experts say the Finance Bill will overburden women, who had just started getting economically empowered, with taxes.
What you need to know:
- One of the proposals is an increase in excise duty on mobile money transfer services from 12 to 15 per cent. This is bound to affect women more than men.
- According to a report, women were found to be more likely to use mobile money on a consistent basis at 43 per cent than their male counterparts at 34 per cent.
This year’s Finance Bill has undoubtedly been one of the most debated by the public because of its controversial proposals. The three per cent housing levy has formed the major part of the conversation. The other provisions, including those that affect women, have largely been ignored.
To rope in women in a conversation that will affect many aspects of their lives, Nation.Africa spoke to tax and legal experts to unpack how the Finance Bill, 2023, will specifically affect them.
One of the proposals is an increase in excise duty on mobile money transfer services from 12 to 15 per cent. This is bound to affect women more than men. According to a report by Financial Sector Deepening Kenya on adoption of mobile money in Kenya, women were found to be more likely to use mobile money on a consistent monthly basis at 43 per cent than their male counterparts at 34 per cent.
In an interview with Nation.Africa, Sonal Tejpar, a partner at Anjarwalla and Khanna Law Firm explained that most women working in the informal sectors use mobile money platforms since they are locked out of traditional banking systems that impose formal legal requirements.
“Telecommunication operators are likely to increase the price of their services and this will affect the digital lending market that has grown particularly because banks have been tightening their credit since the introduction of interest caps. In this bill, excise duty on mobile money transfers will extend to the interest that digital lenders charge their customers, who are mostly women. This will lock out a lot of them from accessing credit,” Ms Tejpar stated.
The bill also seeks to change the bands for turnover tax from the current Sh1 million to Sh50 million to Sh500,000 to Sh15 million. Josiah Kiarie, a monitoring and evaluation officer at the Collaborative Centre for Gender and Development, says the new band will attract a turnover tax rate of three per cent from the current one per cent, if the bill is passed.
“According to the Ministry of Trade and Industrialisation report 2020, most women-led businesses are micro-enterprises, which fall within this category of earning an annual turnover of below Sh1 million. This means women who have only just begun running businesses will be subjected to higher taxes that could overburden them,” Mr Kiarie stated.
On the increase in turnover tax and the lowering of the tax band, Mawazo Institute programmes director Caroline Mose says many women could close their businesses because of high taxes if the bill is passed.
“Where women had started getting economic empowerment, they are now being overburdened with taxes because the government wants to bring them into the tax bracket. Would you rather bring everybody into that tax bracket and lose them or just create a favourable environment by waiving some of these prohibitive taxes and allow women to thrive on those enterprises,” Dr Mose said.
Beauty industry
The government has also proposed five per cent excise duty on human hair wigs, false beards, eyebrows, eyelashes and artificial nails.According to Mr Kiarie, this proposal has a direct impact on the beauty industry which is a big employer of young women.
He adds that according to the Kenya National Bureau of Statistics 2023 Economic Survey, only 38 per cent of women are in waged employment, leaving most of them to work in informal sectors such as the beauty industry.
“Women and young men working in the beauty industry will be heavily affected as they will have to either factor in the tax in their pricing and lose clients or suffer reduction of revenue margins,” Mr Kiarie added.
The only positive proposal he cited is the value-added tax (VAT) exemption on liquefied petroleum gas (LPG), which will be a strong boost for access to clean energy. “Most of the cooking is done by women and an eight per cent tax exemption on LPG will increase access to clean energy. This will make cooking more safe and affordable for women who use firewood and charcoal which have health implications,” Mr Kiarie says.
Also read: Why Finance Bill 2023 faces legal minefields
Besides the mentioned proposals, experts also warn about the social impact on diminishing incomes that most women and children will bear the brunt of. “People are becoming very stressed and when the population is stressed, it is women who bear the burden of that stress. We are going to see an increase in gender-based-violence because men who are the providers in most homes are stressed,” Ms Mose added.
The experts also reiterated the importance of including women in the conversation of the Finance Bill as most of them have been left out.
“The government doesn't practise gender-responsive budgeting. It does not take into account that it is women who do most of the house chores bearing the burden of unpaid labour which has not been considered by the government. Gender should be a parameter that is considered because Kenya has committed to a number of gender equality treaties but remains gender-blind,” Mr Kiare advised.
Most experts who spoke to Nation.Africa also recommended a phased approach to increasing taxes that factors in the economic climate and encourages tax compliance. They also recommend an increase in the social protection budget if the bill is passed so that vulnerable groups such as women, children and persons living with disabilities are cushioned.
