MPs reject Treasury bid to increase price of unga
National Treasury Cabinet Secretary Ukur Yatani with National Assembly Budget committee chairman Kanini Kega and National Assembly’s Finance committee chairperson Gladys Wanga at Parliament Buildings for the unveiling the Sh3.3 trillion Budget on April 7.
A parliamentary team has rejected a proposal by the National Treasury to increase the price of maize and wheat flour.
The Finance and National Planning Committee of the National Assembly in its report on the Finance Bill 2022, rejected what stakeholders called a poisoned chalice.
The team also handed wins on wines and spirits dealers and consumers, rejecting proposed increases in taxes.
The MPs said it would likely lead to flooding of the market with counterfeits.
The lawmakers shot down a proposal to charge excise duty on motorcycles, which would have seen prices rise by up to Sh13,403.64 per unit from Sh12,185.16.
Cost of business
The committee, however, retained a proposed increase in taxes on beauty products and jewellery.
It rejected a proposed requirement for an individual or company to deposit 50 per cent of the disputed amount before filing an appeal at the High Court, a big blow to the Kenya Revenue Authority.
According to the MPs, such a decision would reduce working capital for businesses and deny justice to taxpayers, especially if they cannot raise the amount.
The House will debate and vote on the report.
Should the National Assembly uphold the recommendations of the committee chaired by Homa Bay Woman Representative Gladys Wanga, the National Treasury will have to look elsewhere for money to plug the hole in the 2022/23 budget.
Treasury expects to raise Sh50 billion through the additional taxes. The Finance Bill is enacted annually.
A majority of those who appeared before the committee were opposed to the idea of a taxpayer depositing 50 per cent of the disputed amount with KRA for cases determined by the Tax Appeals Tribunal.
Kenya Association of Manufacturers (KAM) was among the more than 60 entities and individuals that presented views to the committee.
According to KAM, the proposal would increase the cost of doing business and make Kenya unattractive to investors.
KAM Managing Director John Musunga said any increase of tax on basics like maize and cassava flour would make life unbearable for households.
The bill sought to raise Sh51.6 billion, which is part of the Sh2.14 trillion for financing the country’s Sh3.33 trillion budget.
The bill proposed to increase taxes on motorcycles, cosmetics and beauty products, jewellery, beer, wines and spirits, chocolate, and bottled water.
Beer was to attract 10 per cent excise duty, spirits (20 per cent), glass (25 per cent), liquor advertising (15 per cent) and cosmetics (15 per cent).
The bill also proposed to remove tax relief on suppliers of maize and wheat flour.
The Treasury had proposed to retain the supply of maize, cassava and wheat flour in the VAT exemption schedule.
“The committee recommends the deletion of the proposal as contained in the Finance Bill 2022,” the report reads.
