Kenya's ruling coalition amends controversial finance bill amid public pressure

  • World
  • Wednesday, 19 Jun 2024

NAIROBI, June 18 (Xinhua) -- Kenya's ruling coalition Kenya Kwanza made significant changes to the proposed Finance Bill 2024 Tuesday, following public outcry over planned tax hikes on essential commodities, housing, vehicles and financial services.

Speaking during a parliamentary meeting in Nairobi, the Kenyan capital, President William Ruto announced that the revisions to the Finance Bill 2024 were made after considering feedback from the public and other stakeholders during participation sessions.

"We are going to end up with a product in Parliament that came from the Executive and has been interrogated by the Legislature. Through public participation, the people of Kenya have had a say," Ruto said.

Despite these changes, protests erupted in Nairobi against the proposed legislation, which has faced criticism from many Kenyans already struggling with high living costs. Anti-riot police deployed tear gas to disperse protesters who were demanding that lawmakers reject the bill.

The protest, dubbed "Occupy Parliament," was organized via social media under the hashtag "Reject Finance Bill," mobilizing citizens to press lawmakers to reject the controversial provisions.

During the meeting chaired by Ruto, lawmakers and senators reviewed the changes to the Finance Bill 2024 presented by Finance Committee Chairman Kimani Kuria. Kuria, who is also the chairperson of the Finance Committee in the National Assembly, said the bill aims to generate an additional 2.35 billion U.S. dollars in revenue, raising the projected total revenues for the year to 25.7 billion dollars.

The incumbent Cabinet, established after general elections in 2022, has faced pressure to raise additional revenues amid rising government debt repayments.

Key amendments to the bill include the removal of the proposed 16 percent value-added tax (VAT) on bread, sugar transportation, financial services, foreign exchange transactions, and the 2.5 percent Motor Vehicle Tax. Additionally, there will be no increase in mobile money transfer fees, and excise duty on vegetable oil has been eliminated. Levies on the Housing Fund and Social Health Insurance will not attract income tax.

The proposed Eco Levy will now only apply to imported finished products that contribute to electronic waste, sparing locally manufactured products such as sanitary towels, diapers, phones, computers, tires and motorcycles.

Ruto emphasized the government's efforts to curb the importation of products that can be locally produced, aiming to protect local manufacturing and secure jobs. "The stability you see in the foreign exchange regime is a result of our deliberate policies to reduce imports of things that are produced locally," Ruto said.

He noted that the recently introduced electronic invoicing system, e-TIMS, by the Kenya Revenue Authority, will be rescinded for farmers and small businesses with a turnover below 1 million shillings (about 7,800 dollars).

The Finance Bill also imposes excise duty on imported table eggs, onions and potatoes to protect local farmers. Additionally, excise duty on alcoholic beverages will now be based on alcohol content rather than volume.

Ruto said tough decisions have yielded fruits, citing the drop in inflation from 9 percent in 2022 to 5.1 percent in May and the strengthening of the shilling against the dollar.

The government is working on achieving a balanced budget in the next three years, reducing borrowing, and ensuring that the country lives within its means, he added.

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