As the Finance Bill 2024 progresses towards becoming law, the Departmental Committee on Finance and National Planning has released a report detailing the feedback received during the public participation process and their subsequent recommendations. These recommendations have sparked a debate on the true intentions behind the proposed amendments and whether they ultimately align with the objective of promoting sustainable economic growth and social welfare in Kenya.
The recommendations put forth by the Committee appear to address the concerns of taxpayers, offering some relief from the more contentious proposals in the Bill. However, upon closer examination, a more intricate and nuanced perspective emerges. For instance, while the removal of the proposal for a motor vehicle tax cap was well-received, the suggested increase in the Road Maintenance Levy on petroleum fuels has raised apprehensions.
The reasoning behind the increase in the Road Maintenance Levy is attributed to decreased collections and the impact of adverse weather conditions on road infrastructure. Nonetheless, the proposed increase could potentially exacerbate the already high taxes and levies on petroleum fuels, significantly impacting the overall economy by raising transportation and production costs.
Furthermore, the Report advises against the proposal to levy VAT on bread, emphasizing its staple nature in Kenyan households. This recommendation is also extended to the taxation of agricultural and pest control products, locally manufactured mobile phones, and other essential goods.
Conversely, there are indications that VAT exemptions and other concessions might be utilized to appease the public before a more stringent shift to new criteria for VAT rates in the future. Additionally, while the suggestion to increase the tax-deductible meal benefit for employees has been positively received, the proposed removal of the idea to introduce a non-taxable per diem amount has sparked discussions.
It is evident that these amendments have evoked a blend of alleviation and apprehension among taxpayers. The ramifications of these recommendations on the public are yet to be observed.
Netty Nyong’a, a Tax Associate at Deloitte East Africa, offers valuable insights into these amendments. The opinions expressed are her own and do not necessarily reflect those of Deloitte. She may be contacted at [email protected].