Henry Rotich defends new tax law

Treasury Cabinet Secretary Henry Rotich has defended the government’s move to sign into law the controversial Finance Bill, 2018 which has caused public outcry.

Mr Rotich on Sunday said there was no option but for the bill to be passed for Kenya to raise enough revenue to fund the budget and run the country.

He disclosed that with the passage of eight percent VAT on petroleum products combined with other revenue collection measures, the government expects to raise Sh48 billion, adding that Kenya’s debt currently stands at 5.8 percent of the Gross Domestic Product, which translates to Sh560 billion.

President Uhuru Kenyatta signed the bill after MPs on Thursday last week backed his recommendations on the Finance Bill.

Further, Mr Rotich maintained that the government had no option but to pass the bill following the promulgation of the 2010 Constitution.

He said the creation of the 47 counties has also eaten a big budget, adding that more than Sh1 trillion has already been disbursed to the counties and other constitutional offices since 2013.

Mr Rotich said more than 6,000 kilometres of roads are currently under construction in the country not to mention the ongoing power connectivity.

He, however cautioned traders against increasing the cost of basic commodities, which he said will hurt common mwananchi even more.

The passage of the Finance Bill gives the President the legal mandate to levy the new taxes that he hopes will raise the Sh130 billion he needs to keep his spending plans on track.

The State intends to raise Sh17.5 billion from eight percent VAT on petroleum products, Sh9.8 billion from the “kerosene adulteration” tax while imposition of Sh20 per kilogramme of sugar confectionery, including white chocolate, will raise Sh473 million.

The President has also succeeded in pushing through the 1.5 percent levy for the National Housing Development Fund that is expected to generate about Sh57 billion a year.

Under the Housing Development Fund plan, an employer and employee are separately required to contribute 1.5 per cent of the monthly basic salary so long as the sum of the employer and the employee contributions does not exceed Sh5,000.

The President also expects to raise Sh20.2 billion from the 12 percent excise duty on fees charged for mobile money transfer services, the 15 percent excise duty on telephone and internet data services and the 20 percent duty on fees charged for money transfer services.

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