Double hurdle for William Ruto, Raila Odinga talks as deadline approaches

Kalonzo Musyoka

Wiper party leader Kalonzo Musyoka (left) and National Assembly Majority Leader Kimani Ichung’wah during the signing of the bipartisan talks framework agreement on August 29,2023.

Photo credit: Wildred Nyangaresi | Nation Media Group

What you need to know:

  • Mr Odinga’s Azimio la Umoja One Kenya Coalition has insisted on a review of the Finance Act, 2023, with proposals to scrap the housing tax.
  • On Sunday, Mr Cheruiyot said that Kenya Kwanza would not budge on the demand to scrap the housing tax.

Allies of President William Ruto and opposition leader Raila Odinga on Tuesday maintained hardline positions ahead of a crucial meeting with National Treasury Cabinet Secretary Njuguna Ndung’u this morning on tax matters.

The National Dialogue Committee is facing a double hurdle of resolving the highly contentious high cost of living issue and beating the November 26 deadline set by Parliament for the team to conclude the talks.

Mr Odinga’s Azimio la Umoja One Kenya Coalition has insisted on a review of the Finance Act, 2023, with proposals to scrap the housing tax and halving the Value Added Tax on petroleum products from the current 16 per cent to 8 per cent.

The committee had set today (November 22) as its deadline, but this appears unattainable since the report is not ready for submission to Parliament.

In today’s session, the committee co-chaired by Wiper party leader Kalonzo Musyoka and National Assembly Majority Leader Kimani Ichung’wah wants Prof Ndung’u to explain the economic implication of the proposed tax cuts by the opposition. It will be the second time the CS will be appearing before the On Thursday, opposition MPs termed the demand to review some of the taxes imposed by President Ruto an irreducible minimum, just days after Senate Majority Leader Aaron Cheruiyot said the government side would rather the talks collapse than scrap the housing tax.

The Wiper Party issued an ultimatum to the dialogue team, declaring that if urgent measures are not taken to address the escalating cost of living, the party and its supporters are prepared to take to the streets in protest.

“We have seen the threat issued by the Senate Majority Leader. But we are telling them that to reduce the cost of living you must amend the Finance Act,” said Makueni Senator Dan Manzo. “All levies must be reversed. The Finance Act must be revisited so that Kenyans can survive. This time the bipartisan talks have to favour Kenyans.”

Scrap the housing tax

He was speaking after a Wiper party Parliamentary Group meeting chaired by Mr Musyoka.

On Sunday, Mr Cheruiyot said that Kenya Kwanza would not budge on the demand to scrap the housing tax.

“One policy that these people want us to drop is the housing levy. In Kericho and Bomet alone, over 160,000 youth will be employed through the housing levy programme, yet someone wants us to drop this policy,” he said at a church service in Bomet attended by President Ruto. “... the same way they are telling us that there are deal breakers, for us the housing levy is a deal breaker. ”

Wiper Secretary-General and nominated Senator Shakila Abdalla said that Kenyans are feeling the burden of economic challenges that should be resolved by the talks.

“If the cost of living does not decrease, bipartisan efforts will remain at a standstill. Our primary focus is the pressing issue of the cost of living, which is causing widespread suffering among Kenyans,” said Ms Abdalla.

“The current trajectory is unsustainable, and we cannot endure this for the next four years. Therefore, whether through protests or impeachment, we are prepared to take decisive action. Our constitution empowers citizens to engage in necessary actions,” the senator added.

A report-writing retreat in Machakos County last week ended in disarray after the opposition stuck to its demands to have the Finance Act, 2023 reviewed.

A document by the opposition which formed the basis of last week’s discussions contained a raft of proposals to bring down the cost of living. It demanded that the housing tax be scrapped or made voluntary among salaried Kenyans.

“We encourage voluntary participation in affordable housing schemes, provision of tax incentives for construction, and offer relief for first-time home buyers and mortgage interest payments. The coalition opposes compulsory taxation for affordable housing,” said Azimio.

Other demands in the document include a proposal to reduce the Petroleum Development Levy by 50 per cent from the current Sh5.40 per litre to Sh2.70, zero-rating VAT on basic food items, and removing excise duty on locally published books and educational materials.

 Additionally, the opposition has proposed reinstatement of 16 per cent VAT on transfer of business as a going concern, helicopters and helicopter parts and accessories.