The National Assembly has rejected proposals by the National Treasury to raise taxes from pensioners and liquefied petroleum gas (LPG).
National Treasury Cabinet Secretay Ukur Yatani had on June 11 while reading the 2020-2021 budget proposed to end part of tax exemptions by levying taxes on income from the National Social Security Fund (NSSF) and move LPG gas into the VAT-able category.
But in a vote subjected to the committee of the whole house yesterday, the MPs noted that the move would be counterproductive.
On levying pensioners, the lawmakers while voting to pass the 2020 Finance Bill stood with the elderly who had come out strongly to oppose the proposal which they termed as punitive.
“Through these ammendments we have returned the benefit to pensioners. We have had a lot of cries from the elderly over the proposal to tax them. What we are doing here is to save the pensioners,” said the Finance and National Planning Chairman Joseph Limo.
Read: CS Ukur Yatani Targets Loss Making Companies In New Tax Proposal
Suba North MP Millie Odhiambo stated that the government should come up with better ways of cushioning the economy instead of going after the vulnerable people in the society.
In the yesterday sitting, the MPs also adopted reforms moving the supply of maize flour, wheat and cassava flour from exempt status into the zero-rated category.
By so doing the MPs intend to hand Kenyans relief on the cost of buying Unga by allowing millers to recover inputted VAT and pass-on the relief to mwananchi.
The amendment is however expected to be scrutinized again by the House after a six-month lapse as MPS argue for a review of the plans near-term merits and demerits.
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On the other hand, alcohol manufacturers and their clients were dealt a blow after MPs voted to lower the coverage of excise duty on both beers and spirits to products whose alcohol strength exceeds 6 per cent by volume.
This means that the adjusted levy will translate to higher prices for certain beers and spirits hence higher cost of purchase by consumers.
The MPs also passed the proposal by the exchequer to impose tax payable by all companies at the rate of 1 per cent of their gross turnover. The move is aimed at ensuring that loss-making companies contribute to the national revenue.
Read Also: Finance Bill 2020 Proposes 1.5PC Digital Tax on Online Transactions
The house also passed Yatani proposal to introduce digital service tax on the value of transactions at the rate of 1.5 per cent as part of measures to maximize government revenue. The tax targets online businesses that have not been paying taxes.
Income generated from homeownership savings plans (HOSPs) will now be subject to taxation in spite of opposition over its impact on the government’s affordable housing initiative after the MPs approved the National Treasury’s proposal.
President Uhuru Kenyatta will, however, have the final say as the Bill now moves to his office for action. The President will either sign it into law or send it back to the floor of the house with amendments.
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