HBA2302.

ADVANCED TAXATION

TAXATION PROPOSALS

It is aimed med to generate additional Ksh. 27.5B in tax revenue for Financial
year 2018/2019

Customs Measures

 Custom duties aimed at promoting industrialization and encouraging

investment and also creating incentives in Agricultural and manufacturing
sectors
 There is an increased rate of import duty from 25 percent to 35 percent in a
wide range of steel and iron products which are available in Kenya.
 There is an increased rate of import duty from 25 percent to 35 percent in
some spare and paper board produced in the region.
 There is an introduced specific rate of import duty of USSD 5 per unit or 35
percent or 35 percent in order to guard against revaluation
 There is an Advalorem Duty of 35% to protect timber industry.
 There is 35 percent or USSD 500MT to protect local manufacturers.
 Manufacturers of acaricides, pesticides have been allowed to import raw
materials and inputs under th EAC duty remission scheme.
 Raw materials used in making of animals feeds are exempted from th VAT.

CRITISIM

 An increase in Custom duty will make local products and local producers of
theses products will end up selling them at a higher price which is not
affordable by the poor.
 The locally manufactured products might not might the rapid population
and they might not be of the required quality.
 Members of parliament are importing their vehicles and goods free of
charge! The government has to introduce atax for that. The poor are the
only one who are paying the tax to import their little products why not the
Members of parliament who earn huge amounts of money and huge
allowances?

EXCISE DUTY
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There is an increased excise duty fro 20 percent to 30 percent on private

passenger motor vehicles

 The ministry plans to to introduce a Robin hood tax of 0.05 on amount of

500,000 or more transfered through banks and other financial institutions
 The government sector increased excise duty fees charged on money
transfer services by the cellular phones service providers from 10%_12%.

CRITISIM

 This increase has made public traveling unaffordable because the means of
transport have become more expensive and the poor cannot afford
because the vehicle owners shift the burden of tax to the passengers so
that I the long ran the passengers help the vehicle owners in payment of
the tax in direct through payment of huge transportation fee.
 An increased tax on cellular money tarnsfer has made kenyans not to carry
out more transactions using cellular phones hence accumulate the cash
increasing the chances of losing money and theft.

Income Tax

 There us a proposed introduction of higher tax band of 35% on incomes

above 750,000 per month and incomes in areas of capital gain tax from 5
percent to 20 percent.

CRITISIM

 The rich in the society are not taxed heavily which should be the case in
order to narrow down the gap.
 This doesn't meet the principle of equity the poor are still being taxed, the
rich ought to be taxed heavily to bring the economy to stability and to
reduce the gap between the poor and the rich .

VALUE ADDED TAX

 The government plans to add and hence increase the tax rates of certain
products and decrease some.
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 According to the Ministers proposal, each worker and employee has to pay
1.5% to their monthly pay attract 1.5% to contribute to the housing fund.
 Rural homes and slums have to pay 18 shilling for every litre of kerosene
used as the government tries to fiight fuel adulteration.
 Mobile money service providers have to pay 15% each cash transfer to
attract the excise duty
 Using of ATM, cheque book, bankers cheque, and over withdrawal and all
other banking services to attract 20% tax
 Motorists have to pay 8% VAT on fuel and cooking gas products down from
16% earlier recommended.
 Each child will also pay 20 bob for he or she buys chocolate and sweets
 Kenyans who go online will now pay 20% tax to fund the Budget short fall
 The government has cut short spendings by 55B owing to projected tax
revenue shortfall.

HOW THE VAT AFFECTS THE LIFE OF KENYANS

 The cost of living is likely to go up despite the presidents decision to reduce

punitive fuel tax by half.
 Sending money via mobile money transfer service will be more expensive.
 It will be expensive withdrawing cash from an ATM transfer into mobile
money or wallet as the government has doubled taxes on all banks as well
as mobile money transactions
 Time spent on Facebook, WhatsApp or Twitter will be more precious as tax
changes will see the cost of Internet bundles go up
 The citizens in the rural will also be affected due to tax on kerosene increase
making cooking and lighting for millions of poor folk an expensive affair.
 Sweets and chocolates have also been put in tax bracket hence the rate of
consumption will have to decrease by the children who were the major
consumers
 This has led go decreased government expenditure by 55B.
 The government is trying to cut expenditure and at the same time raising
more tax by withdrawing money from the economy with makes the
economy not to grow.
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 Formal employees have ¹/³ of their income chopped off as tax and again the
government plans to reduce their income by requiring them to contribute
1.5% of their earning to National Housing Development Fund from an
earlier proposal of 0.5%
 Some people in the formal employment might be earning less than those in
the Jua kali sector and yet the latter are not expected to contribute the
1.5%

RECOMMENDATIONS

 Those in th jua Mali sector who earn more than some of those in formal
sector shuold also pay the 1.5%
 The parliemetary spending should also be reduced because they spend 30B
and the budget deficit is 700B twenty times what they spend
 The taxes seem to target the middle class hence the focus on money
transfer and bank transaction. The government haas to ensure equity in tax
distribution
 The government should reduce waste from Corruption and the salary and
of senior officials should be taxed
 The MPs should also pay the custom duty and their salary be chopped off.
 The KRA has to be competitive and work on the work allocated to them of
tax Collection.