The Finance Bill, 2024, currently under review by the National Assembly, has drawn sharp criticism from Gideon Moi, National Chairman of KANU.
Moi has voiced significant concerns over the proposed tax measures, labeling them as punitive and detrimental to the economic well-being of Kenyan citizens and businesses during an already challenging economic period.
The former Baringo senator highlighted the widespread disapproval from economic experts, think tanks, and the general public, who argue that the Bill, if passed in its current form, would severely impact Kenyans’ disposable incomes, diminishing their purchasing power and adversely affecting livelihoods.
He emphasized that such measures could drive businesses out of the economy and push more Kenyans into poverty.
“The National Assembly Finance and Planning Committee must ensure that its final report reflects the opinions, concerns, and aspirations of Kenyans on the Bill,” Moi stated.
He pointed out that this is an opportunity for the Committee to redeem itself following the inadequate public participation exercises of the previous financial year, where public input was largely overlooked.
Moi argued that sustainable taxation frameworks should foster a favorable business environment that promotes economic growth, expands the tax base, and ultimately increases tax revenues.
He criticized the government’s aggressive tax collection approach during an economic downturn, which he believes will reduce tax revenue. This concern was echoed in the National Treasury’s recent report indicating that the Kenya Revenue Authority (KRA) had fallen short of its tax revenue projections.
Particularly contentious are proposals to impose excise duty and VAT on essential financial services. Moi noted that such measures contradict the nation’s goal of financial inclusion, which aims to combat poverty and inequality. He highlighted the critical role of services like M-Pesa in supporting basic needs for many Kenyans, arguing that taxing these transfers as income is misguided.
The introduction of a motor vehicle circulation tax, which mandates insurance companies to collect the tax with penalties for non-compliance, has also been criticized. Moi warned that this could de-incentivize the insurance sector and discourage comprehensive insurance uptake.
Moi further raised concerns about the potential impact on food security, emphasizing that increasing taxes on basic household food items like bread would exacerbate malnutrition and starvation, particularly among children.
“The hope of Kenyans lies with the National Assembly to amend the Bill and alleviate the burden of over-taxation,” Moi asserted.
He called for a shift in government focus from taxation to industrialization and manufacturing, which he believes would lead to sustainable economic growth driven by the private sector. This shift would create jobs, reduce unemployment, and expand the tax base, thus increasing tax revenue to fund public programs.
To foster economic incentives and attract foreign investment, Moi urged the government to improve the ease of doing business, simplify tax regimes, and combat public-sector corruption.
The Finance Bill 2024, remains a critical topic of discussion, with its final form yet to be determined by the National Assembly.