April 25th 2017

Business / Economy

Opposition raises alarm on sweeping changes to VAT Act

Kenyans are heading to a harder economic times with every item being slapped with a tax which is a concern to everyone in the country and, according Mbadi, members of parliament are the ones to save this country.

By Cyrus Mutaicmutai@kenyafreepress.comTuesday, 12 Jul 2016 19:16 EAT

Effective October, basic goods including books, milk, mobile phones handsets and newspapers will be subject to 16% value added tax (VAT).

This comes as a result of the implementation of the new VAT Act 2013 where the previously VAT exempted commodities will be subjected to the 16% tax and the essential items such as sanitary pads and maize being exempted.

The new taxes have raised concerns among Kenyans who are the ones affected by the taxes with cost of living expected to rise.

According to the Deputy President William Ruto, the tax increase is meant to fund government projects such as road construction and maintenance as well as railway construction among other government projects.

The opposition coalition, CORD, has raised alarm over the frequent increase and introduction of new taxes since Jubilee government came to power even as the government prepares to implement the Act come September.

According to Orange Democratic Movement chairman John Mbadi, Kenyans "have been taxed enough and they are not ready to pay any more tax."

Since the Jubilee administration came to power, many tax charges have been introduced and others increased.

With effect from January 2015, the government reintroduced capital gains tax which had been suspended in 1985. It is now levied at 5% in respect of any property being transferred in Kenya.

The government introduced turnover tax based on the gross income of a business with a segment of business which earn between Sh500,000 and Sh5 million in a year of income.

Other taxes were introduced in 2015 with property owners required to pay 12% of their gross rental income, increase in road maintenance levy by three shillings per litre and 5% tax on gambling winnings among other taxes.

All employees are required to acquire Kenya Revenue Authority PIN numbers and are expected to file their returns every year failure to which they are subjected to penalties and interest on the unpaid tax.

All these taxes have been introduced amid rising corruption in government, increased borrowing by the government from international sources and loss of money in different government departments.

The government has borrowed twice the amount borrowed by the two previous governments without the taxes which have been currently introduced in the country, leaving Kenyans wondering why they are being subjected to such huge amounts of taxes despite the borrowings and the increased resources in the country.

The country has lost substantial funds in recent years in such mega scandals as the NYS, Eurobond and Youth Fund, which could have gone into development projects.

Kenyans are heading to  harder economic times with every item being slapped with a tax which is a concern to everyone in the country and, according Mbadi, members of parliament are the ones to save this country.

The increase in cost of kerosene and other petroleum products will largely affect the living standards of the poor Kenyans and the economy of the country in general.

The writer is a student of journalism at the Technical University of Kenya and intern writer at the Kenya Free Press, specializing in politics, sports, agribusiness and international affairs.





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