No tax cuts as National Dialogue Committee team to release report on Saturday
National Dialogue Committee co-chairpersons Kalonzo Musyoka (left) and Kimani Ichung’wah address journalists at the Hilton Garden Inn Hotel in Nairobi on Wednesday, November 22.
What you need to know:
- The Azimio la Umoja One Kenya Coalition party has been pushing for a review of the Finance Act, 2023
- A tax policy review to be implemented in February could make some of the changes.
The National Dialogue Committee will make public its report on Saturday even as the National Treasury said the tax cuts demanded by Opposition leaders cannot be implemented immediately.
Treasury Cabinet Secretary Njuguna Ndung’u told the team that the government is undertaking a tax policy review that it plans to implement in February.
According to sources at the meeting, the review may include increasing the tax base alongside reducing some of the taxes seen as punitive.
Opposition outfit Azimio la Umoja One Kenya Coalition Party has been pushing for a review of the Finance Act, 2023, with proposals to scrap the controversial housing levy and a reduction of value added tax on petroleum products from the current 16 per cent to eight per cent.
But Prof Ndung’u told the committee that the proposals are not viable in the current economic climate. He said the country has maturing debts with accompanying interests that need to be serviced from the taxes being raised through the Finance Act, 2023.
The Opposition had proposed that the controversial housing levy be scrapped or made voluntary among salaried Kenyans.
Their other demands included a reduction of the Petroleum Development Levy by 50 per cent from the current Sh5.40 per litre to Sh2.70 and zero-rating of VAT on basic food items.
But the CS told the 10-member team that the country will have to wait until February when a comprehensive tax regime review is set be conducted. Nation understands that the team also made a lot of concessions on some of the contentious items that have been point of friction between the ruling Kenya Kwanza Alliance and Azimio.
Committee co-chairs Kalonzo Musyoka and Kimani Ichung’wah told journalists in a joint press conference that the outcome of the talks will be announced on Saturday.
“We are in the process of agreeing on what will constitute our report, which shall be adopted and released to the country on Saturday,” said Mr Ichung’wah.
The team has a November 26 deadline set by Parliament to conclude the talks and present its report to the House for debate.
“This morning, we had a long engagement with [Prof Ndung’u] over the cost of living and tax regime,” Mr Ichung’wah said.
He added: “We agreed on the timelines and what reviews would be required.”
On his part, Mr Musyoka said the discussion the team held with Prof Ndung’u was centred on the cost of living that has remained contentious. Mr Musyoka and Mr Ichung’wah also revealed that the final document will have a list of items agreed upon and those not agreed upon in the event they fail to have a consensus on all the agenda items.
A clause in the framework agreement signed by the opposing camps provides that the National Dialogue Committee will submit to Parliament “a list of agreed issues and those not agreed upon” for consideration.
The provision appears to suggest that the two Houses of Parliament will have the final say on items that the team may fail to agree on, opening up the dialogue to a contest of numbers between the two rival sides on the floor of the National Assembly and the Senate.
“The final report and proposals of the committee shall contain a list of agreed issues and those not agreed upon. The final report and proposals of the committee shall be presented to the respective coalition leaders. In addition, the final report and proposals of the committee shall be submitted to the Leader of the Majority Party and the Leader of the Minority Party of each House of Parliament,” states the framework agreement signed on Wednesday.
It adds:“Upon presentation of the final report and proposals of the committee, the Leader of the Majority Party and the Leader of the Minority Party of each House of Parliament shall table them and ensure that any proposed reform is introduced in Parliament.”
