By Brian Okoth
The controversial Finance Bill in Kenya sailed through in parliament on Wednesday after the ruling party MPs voted to adopt it amid strong rejection by opposition lawmakers.
The bill seeks to introduce several taxes, including raising the income tax of Kenyans earning between Ksh500,000 ($3,580) and Ksh799,999 ($5,725) per month – from 30 per cent to 32.5 per cent.
Kenyans with gross monthly salaries above Ksh800,000 ($5,727) will pay a new income tax of 35 per cent if the bill is eventually approved.
The government also seeks to introduce a 1.5 per cent housing levy on salaried employees and increase taxation on petroleum products from 8 per cent to 16 per cent.
Digital content creators will also part with 5 per cent of their monthly earnings, which will be submitted to the government as tax.
Turnover tax has been increased to 3 per cent in the bill proposal from the current 1 per cent.
Digital assets will attract a 3 per cent tax, while taxation on repatriated profits will be 15 per cent, if the bill is approved in the subsequent stages.
The bill passed the second reading stage when the ruling Kenya Kwanza (Kenya First) MPs overwhelmingly supported it in the National Assembly.
Eighty-one (81) opposition MPs voted against it, while 176 government-allied legislators voted to approve it.
Opposition MPs have vowed to use the courts and peaceful demonstrations to stop the government from implementing the new taxes, should the bill be adopted.
Four more stages
The bill now proceeds to the committee stage where each proposal will be debated upon separately. It is at this stage that further amendments can be made to the individual proposals.
The bill would, thereafter, proceed to the report and third reading stage, where no new amendments would be accepted.
A vote would be taken again before the bill is possibly transmitted to President William Ruto for his consideration.
Opposition party, the Orange Democratic Movement (ODM), which is headed by veteran politician and former Prime Minister Raila Odinga, lauded the lawmakers who rejected the bill during the second reading on Wednesday.
"Congratulations to the 80-plus members of parliament who voted against the punitive Finance Bill 2023/24. Your voice has been heard. You stood with Kenya. Your vote represented millions of oppressed, poor and helpless Kenyans," ODM said in a statement.
Need for additional funds
President Ruto is on the recording defending the new tax proposals, saying the government needs funds to sustain its operations.
Ruto’s administration has drawn a Ksh3.6 trillion ($26 billion) budget, with a significant amount of money set to be borrowed to finance the plan.
Kenya collects roughly Ksh2 trillion ($14 billion) in revenue, prompting the government to seek credit to meet its budget obligations.
The government projects that the new taxes, if introduced, will enable it to collect an additional Ksh211 billion ($1.5 billion).
