Hard times are ahead in some sectors of Kenya, even though some citizens may have found solace in the significant tax plans that President William Ruto’s administration unveiled on Tuesday.
The National Assembly Finance Committee has decided to move forward with tax increase proposals in a few crucial areas, which will ultimately affect ordinary citizens.
The road maintenance charge rise from Sh18 to Sh25 is at the top of the list.
The fee was increased per the advice of Transport CS Kipchumba Murkomen, who stated that doing so will enable the collection of Sh115 billion, as opposed to the present Sh84 billion.
During his appearance before the Finance Committee to provide feedback on the Finance Bill 2024, Murkomen cited the growing difficulties in maintaining roads as grounds for the proposal.
“Delayed maintenance is adversely impacting road conditions, a pattern that is projected to accelerate unless resolved. In 2016 when the fuel levy charge was last adjusted, the length of paved roads nationally was 16,600 kilometres. In 2024, the length of paved roads has increased to 25,411 kilometres.” Murkomen said.
Kuria Kimani, chair of the National Assembly Finance Committee, stated that the money raised from the charge will go toward road upkeep and repairs.
The Finance Committee’s decision to keep the proposal to raise the Import Declaration Fee (IDF) from 2.5 to 3.5 percent will be detrimental to Kenyans who import goods.
Due to the increased importation of many commodities, even necessities like food and clothing, Kenyan citizens will ultimately bear the brunt of the price increase in order to access these goods.
The IDF was reduced from three percent in the 2022–2023 financial year to 2.5 percent in the 2023–2024 financial year.
The committee explained the hike as an attempt to recoup Sh10 billion that was lost when the IDF was lowered from 3% to 2.5%.
“The proposed increase of aIDF to 3.5 per cent would therefore help to restore the performance of this tax head in line with projected budget estimates for 2025/25 Financial Year,” Kimani stated.
Also, the environmental charge tax on imported completed goods was kept by the Kimani-led committee. Imported goods like pads and sanitary towels will be impacted by this.
Additionally, the committee proposed the implementation of excise tariffs, which inflicted a blow to importers of eggs, onions, and potatoes.
Given that the market price of onions is currently at an all-time high, the excise duty will push the product out of the grasp of the average person.
The Road Development Levy (RDL), which is now set at 2.5 percent, has also been suggested for increase by the committee.
The committee stated that the funds raised would be used to create an electric light rail system.
To enhance revenue, the committee has also suggested raising the excise tax on betting.
Regarding the importation of the export and investment promotion levy on leather goods, ceramic sinks, washbasins, imported shoes, and denatured ethyl alcohol, a similar proposal has been made.
