MPs Block Govt's Attempt To Tax Bread, Unga, Boda Bodas

Treasury CS Ukur Yatani lamented that seeking MPs' approval had delayed the enforcement of tax changes. 

MPs Block Govt's Attempt To Tax Bread, Unga, Boda Bodas

MPs, on Tuesday, June 22, shot down a series of tax proposals by Treasury CS Ukur Yatani with fears that they would ignite more nightmares on Kenyans already dealing with a massive burden of the harsh economy.

In the draft amendments made to the Finance Bill 2021, they rejected the CS's plan to increase Value Added Tax (VAT) without contributing their views. The CS lamented that seeking MPs' approval had delayed the enforcement of tax changes. 

Yatani then was hit with another blow after the lawmakers further rubbished his proposed VAT taxes on bread, flour and a 15 percent tax on the purchase of motorcycles.

A loaf of bread. /FILE

Gladys Wanga, the Chairperson National Assembly Finance Committee, lamented that bread is a basic commodity in all homes, thus it shouldn't be taxed. Yatani had sought the Parliament's approval to slap a 16 percent Value Added Tax (VAT) on bread.

“As much as we want to raise funds to finance our budget, we should be livid about the fact that Kenyans are already struggling,” Wanga stated. 

MPs unanimously agreed to maintain the price of bread, while also turning down Yatani's proposal to tax boda bodas stating that the sector has created lots of job opportunities, especially during the COVID-19 pandemic. 

Yatani's was inching towards charging boda boda buyers 15 percent for each newly purchased bike rather than the normal Ksh11,608 rate. 

Another tax that was thrown out was the Digital Service Tax (DST) which was to be imposed on digital services offered in Kenya. KRA was set to charge digital marketplaces 1.5 percent of the gross transactional value.

Expectant mothers were offered a sigh of relief after the MPs proposed VAT exemption of all products relating to newborns. 

The MPs further proposed cutting down the excise duty on betting from 20 percent to 7.5 percent stating that the reintroduction of the 20 percent will affect gamblers and betting companies.  

Kenyans were, nonetheless, marooned in despair after the lawmakers rejected to exclude fees earned from 20 percent excise duty on loans. 

Banks will thus pay over Ksh7 billion as tax yearly. However, loan seekers will be heavily affected as banks argued that they will raise the cost of loans.

A banking hall in Kenya. /FILE