In response to widespread public outcry, a Kenyan parliamentary panel has advised against implementing several proposed taxes included in the government’s funding bill for the 2024/25 fiscal year. These recommendations come amid growing protests in the capital.
The proposed tax changes are part of President William Ruto’s efforts to increase revenue and reduce the country’s reliance on borrowing. However, last year’s introduction of a housing tax and increased contributions to the national health scheme had already led to significant public dissatisfaction.
Kimani Kuria, chairperson of parliament’s finance committee, announced that the panel recommends scrapping new taxes on motor vehicle ownership, financial services, mobile phone service charges, and the proposed value-added tax on bread. “We have listened to the view of Kenyans… we need to protect Kenyans from the increased cost of living,” Kuria said after a meeting with lawmakers from Ruto’s governing coalition.
During Kuria’s announcement, police used teargas to disperse hundreds of demonstrators near the parliament building. Protesters, including Muthoni Wanjiku, expressed their frustration with the rising cost of living. “We can’t even afford diapers for the kids anymore… we need this government to do something,” Wanjiku said.
The proposed tax changes have faced opposition from various sectors, including bankers, manufacturers, and the Law Society of Kenya, who argue that the measures could harm the economy.
The legislative process for the budget will continue with a detailed debate on the bill scheduled for Wednesday and Thursday. If approved, the bill will be sent to President Ruto for his signature. The finance bill aims to generate an additional 346.7 billion Kenyan shillings ($2.71 billion) in revenue, according to Finance Minister Njuguna Ndung’u.
Meanwhile, some of last year’s taxes, such as the housing levy, are still being contested in court, highlighting the ongoing challenges faced by the Ruto administration in balancing fiscal policy with public sentiment.
The Kenyan shilling has been under pressure, reflecting the economic uncertainties surrounding the tax debates. As the nation awaits the outcome of this legislative process, the voices of citizens calling for economic relief continue to be heard across Nairobi.
Photo source: Google
By: Montel Kamau
Serrari Financial Analyst
19th June, 2024
