Parliament has been swamped with hundreds of public petitions arguing against President William Ruto’s proposed taxes, piling the pressure on ruling coalition lawmakers who have been whipped to pass the contentious legislation.
The National Assembly has received at least 1,000 memorandums on the Finance Bill 2023, with sources indicating that 970 of those opposed the Bill. This is likely to give Kenya Kwanza a hard task in pushing the Bill through in the House.
National Assembly Clerk Samuel Njoroge put the figure at 893 memorandums received by Parliament — which comprises 756 sent as emails and comments and another 137 substantive submissions made by different entities and individuals before the responsible committee.
Mr Njoroge did not, however, give a breakdown of those that opposed or backed the Bill.
The proposals that attracted the highest number of petitions were those on raising the value added tax (VAT) on petroleum from eight to 16 percent; the proposed housing levy pegged at three percent of an employee’s basic salary; as well as the increase of income tax to 35 percent for those earning above Sh500,000.
Many petitioners have also rejected proposals such as the requirement to deposit a security worth 20 percent of disputed tax amounts before appealing against a taxation judgement.
Many have also rejected proposed agency taxes such as withholding tax, excise duty on gaming and betting revenue and withholding VAT to be remitted to the Kenya Revenue Authority (KRA) promptly.
The Committee on Finance and National Planning has, from Monday, been conducting public participation through meetings of different stakeholders and listening to their concerns over the Bill.
The National Assembly’s deputy majority leader, Mr Owen Baya, yesterday downplayed the criticisms by stakeholders, saying only corporates are against the new taxes.
“Actually, most corporates will oppose the Bill because they do not want to pay taxes and will incite the public,” Mr Baya said.
Memorandums obtained by the Sunday Nation had their senders opposing most of the proposals contained in the Bill.
The Anglican Church of Kenya, through Archbishop Jackson ole Sapit, says the new taxation regime will burden a majority of Kenyans. It has called for thorough public scrutiny before the proposals are tabled in Parliament.
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The Petroleum Institute of East Africa (Piea), in its memorandum to Parliament, warns that the increase of VAT from the current eight percent to 16 would lead to an increase the cost of fuel by Sh12.56 and Sh12.76 per litre of diesel and petrol respectively, which might lead to a “disastrous” knock-on effect on the rest of the economy.
“The higher cost of fuel and consequently production will result in higher prices of goods in the Kenyan market and may negatively impact the cost of living ... with adverse political consequences,” Piea warns.
Piea is the professional body for the oil and gas industry in the East African region. It argues that diesel and petrol are an integral commodity in the Kenyan economy.
Piea has also opposed the proposal to remove the eight percent VAT on liquefied petroleum gas (LPG), thereby making the product tax-exempt. It proposes that gas should be zero-rated instead because exemption will still pass some costs to consumers.
“The exemption means that VAT on expenses directly attributable to supply of LPG will have to be expensed as these are not claimable. This erodes the desired effect of making LPG affordable as traders will pass on the expensed VAT to consumers,” Piea says.
On amending section 32 of the Tax Tribunals Act which provides that where a party shall deposit of 20 percent of disputed tax before appealing judgement to the High Court, Piea says the proposal will negatively affect taxpayers’ cash flows as there is no provision that the money will earn interest while at the commissioners’ hand as court cases can drag for years.
The Kenya Airline Pilots Association (Kalpa) is also opposed to the three percent housing levy. It argues that most of its members have already secured housing.
“Vital information on the national development project remains unavailable, leaving our members unaware of the details of the project to warrant them committing their monies to the project,” Kalpa adds.
The Bill proposes to introduce mandatory contributions by both the employer and employee to the National Housing Development Fund at three percent of the employee’s basic salary, provided that the sum of the employee contributions do not exceed Sh5,000 a month.
“We propose that the three percent housing levy be made voluntary for workers who are desirous of owning houses under a government programme but not mandatory,” Kalpa says.
It argues that if the government wants to implement the programme, then it should first collapse other existing housing schemes.
“Workers’ salaries have not been raised for years yet the government wants to further squeeze their take-home, insensitive to the high inflation of basic commodities,” it adds.
The association argues that with the rampant and runaway corruption in government, the Kenya Kwanza administration should focus on dealing with corruption as a way of enhancing its revenue rather than overtaxing workers.
The Institute of Surveyors has also opposed the housing levy, saying the mandatory deduction will lower an individual’s disposable income.
The institute says that although housing is needed, it should not be forced on people.
The institute has also opposed the section which proposes that a person who receives rental income on behalf of the owner of the premises shall deduct therefrom and remit within 24 hours, saying it is impractical.
The Chartered Certified Accountants also oppose the housing levy, saying the contribution should be voluntary.
The accountants have also opposed the proposal that seeks to change the timelines of remitting withholding VAT from the current 20 days after deduction to three, saying that taxpayers appointed as withholding VAT agents will suffer the administrative burden of ensuring that tax withheld is remitted in a timely manner.
“The three-day timeline presents a compliance risk as it is extraordinarily short,” the accountants say.
The Marketing Society of Kenya also opposes the Bill, particularly the introduction of a 15 percent withholding tax on digital content creation.
They term it discriminatory.
“The withholding tax rate of 15 percent on digital content creation is discriminatory and punitive as other professional fees are charged at five percent,” the society says in its memorandum.
The association also says the Bill does not specify a threshold for the taxable amount of the income earned by digital content creators.
The Kenya Tobacco Control Alliance has also expressed concern that for the first time, the Finance Bill does not increase the excise duty on tobacco and nicotine products. It terms the omission troubling.
Newly rebranded Ports Sacco, through its CEO Dedan Ondieki, says there ought to be balancing to ensure the majority voice is well captured in the Bill.
One of the opposition Azimio la Umoja’s strategies to bring down the Bill is to use critical memorandums presented to Parliament to force Kenya Kwanza into making amendments.
“We will ask those in Kenya Kwanza on the floor of the House that if Kenyans have rejected the Bill, who are they to say yes and go against the wishes which Parliament is supposed to defend?” posed deputy minority leader Robert Mbui.
National Assembly Majority Leader Kimani Ichung’wah, speaking in Naivasha during the annual national parliamentary symposium, assured Kenyans that all views collected during the public participation will be considered.