By Patricia Mollyne Mataga
Kenyans have recorded a major win against the government’s new tax proposals contained in the controversial Finance Act.
This is after the government agreed to drop some of the contentious proposals.
In a media briefing after a Kenya Kwanza Parliamentary Group meeting on Tuesday, June 18, 2024, National Parliament Finance Committee chairperson Kuria Kimani announced that several proposals had been dropped.
Among those dropped include the controversial motor vehicle tax.
“A proposal to introduce a tax on motor vehicles has been dropped,” said the Molo Member of Parliament.
Tax on motor vehicles has been among the most contentious, with experts questioning the rationale behind taxing what they consider an asset that is taxed on acquisition.
The issue is now a thing of the past with the latest proposal on the Finance Bill 2024, set to be tabled in Parliament.
Other controversial tax proposals removed from the Bill include the introduction of a 16 per cent Value Added Tax on bread and an increased levy on financial transactions.
There have been concerns that VAT on bread would increase the price by Ksh10 while bank and mobile money transactions were also set for an increase.
Excise duty on oil has also been reduced to 5 per cent.
Other key areas dropped in the 2024 Finance Bill are the removal of farmers from the list of those that were to be incorporated into the electronic tax management system (eTims) and locally produced Goods to be exempted from the eco levy tax that will now be imposed on imported Finished products ONLY.
“Finance Bill amendments: – Proposed 16% VAT on bread removed. – Proposed VAT on transportation of sugar removed. – VAT on financial services and foreign exchange transactions removed. – No increase on mobile money transfer fees. – 2.5% Motor Vehicle Tax removed…,” State House Spokesperson Hussein Mohammed posted on his X handle.