Ruto’s New Taxes for Schools, Car Owners, and Alcohol
Despite the widespread public concern following the introduction of the 2023 Finance Act, which added more taxes to an already heavily taxed population, it appears that the government is persisting in imposing additional financial obligations on Kenyan citizens to fund its development initiatives.
The government is currently seeking public input on its medium-term revenue strategy for the fiscal years 2024–2025 and 2026–2027, with a deadline for Kenyans to provide feedback by October 6.
To create a consistent tax framework, the revenue plan suggests a review of the VAT rate to align it with that of other East African Community (EAC) member states at 18 percent. If implemented, this change will result in higher prices for all manufactured goods, including consumer products.
Other proposals include removing VAT exemptions and zero-rating products, as well as reintroducing a minimum tax regime to discourage tax evasion by corporations and other entities.
There’s also a proposal to introduce VAT on services provided by institutions not directly related to education, potentially affecting extracurricular activities, despite the encouragement of such activities under the Competency-Based Curriculum (CBC).
The National Treasury is also aiming to eliminate personal reliefs related to insurance and medical coverage for salaried Kenyans. Car owners may face additional charges, including an annual motor vehicle circulation tax based on engine size.
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Additionally, there are plans to increase excise taxes on fossil fuel-powered vehicles, review excise tax on hydrocarbon products, and introduce similar taxes on coal.
The government intends to impose a tax of up to five percent on agricultural products, despite its push to boost food security through increased farming.
In an effort to discourage the consumption of alcoholic, tobacco, and sugar-sweetened non-alcoholic beverages due to health concerns, the National Treasury is proposing higher excise duties on these items, which could lead to price hikes.
Prof. Njuguna Ndung’u, Cabinet Secretary of the National Treasury, argues that these measures are necessary to fund the Bottom Up Economic Transformation Agenda (BETA) and align Kenya’s revenue with the East African target of 25 percent of GDP.
However, many analysts expect that these proposals will lead to contentious debates, given the ongoing economic challenges caused by the COVID-19 pandemic, including wage reductions.
Ruto’s New Taxes for Schools, Car Owners, and Alcohol
