Government Drops Controversial Proposals from Finance Bill 2024 Amid Public Pressure

Kenyans received a wave of relief as the government announced the withdrawal of several controversial proposals from the Finance Bill 2024. This move follows intense public outcry and pressure, culminating in a meeting of members of parliament from the ruling Kenya Kwanza coalition, led by President William Ruto, at State House in Nairobi.

Among the most contentious proposals that were dropped was imposing a 16 percent Value Added Tax (VAT) on bread, financial services, and foreign exchange transactions. The removal of these proposed taxes marks a significant win for the public, who had voiced their concerns loudly and persistently.

Here is a detailed list of the changes made to the Finance Bill 2024:

1. 16% VAT on Bread: The proposed tax on bread has been entirely removed, ensuring that this staple food remains affordable for all Kenyans.

2. Excise Duty on Vegetable Oil: The government has removed the excise duty on vegetable oil, further relieving household financial burden.

3. Mobile Phone Transfer Services: There will be no increase in transaction fees for mobile phone transfer services, maintaining the current status quo.

4. Tax Deductible Statutory Deductions: Statutory deductions such as the Housing Levy and NHIF will now be tax deductible, reducing the taxable income and leaving more disposable income for individuals.

5. Eco-Levy: This levy will only apply to imported finished products. Locally manufactured items, including diapers and sanitary towels, are exempt.

6. VAT Threshold: The VAT registration threshold has been increased from Ksh.5 million to Ksh.8 million. This change means that SMEs with a turnover of less than Ksh.8 million will not need to register for VAT.

7. eTIMS Exemption: Small businesses with a turnover of less than Ksh.1 million will be exempt from the eTIMS requirement.

8. Excise Duty on Eggs, Onions, and Potatoes: The proposed excise duty will only apply to imported eggs, onions, and potatoes, making locally produced goods more competitive.

9. Illicit Brew: Excise duty will now be based on alcohol content, meaning producers of high-alcohol content beverages will pay more.

10. Pension Contributions: The allowable amount for tax-deductible pension contributions has been increased from Ksh.20,000 to Ksh.30,000 monthly.

11. Junior Secondary School (JSS) Teachers: Funds have been allocated to hire all 46,000 JSS intern teachers on permanent and pensionable terms, with an additional 20,000 teachers to be recruited.

12. Motor Vehicle Tax: The proposal to amend the motor vehicle tax through the Income Tax Act has been dropped, avoiding potential negative impacts on the insurance industry.

13. Sugarcane Transportation: VAT on the transportation of sugarcane from farms to milling factories has been removed.

These amendments reflect the government's response to the voice of the people, demonstrating a commitment to easing the economic burden on Kenyans. The decision to drop these proposals has been met with widespread approval and is seen as a significant step towards economic stability and growth.

President William Ruto emphasized, "Our priority is to ensure that our economic policies are fair and beneficial to all Kenyans. The adjustments to the Finance Bill 2024 are a testament to our commitment to listening to and addressing the concerns of our citizens."

As the revised Finance Bill 2024 is set to be tabled in the National Assembly on Tuesday afternoon, the nation watches closely, hopeful for continued positive changes and economic reforms.