NAIROBI, KENYA: High income earners have been spared paying more taxes following public concern on the new income tax bill.
During 2018/19 budget presentation CS Henry Rotich said the government has shelved the bill which proposed 35 per cent top tax rate as part of the quest to increase income tax revenues.
“I had proposed to introduce a higher tax band of 35 percent on income above Sh750, 000 per month, and an increase of the capital gains tax from 5 to 20 percent. However during the public consultation on the bill, members of the public raised concern on the bill, and were of the view that the higher rates were not appropriate at the time.”
In this year’s budget, the treasury balanced the need to provide resources to key priority areas to support the enablers and drivers of President Uhuru Kenyatta’s big four agenda and accelerate economic growth while at the same time ensuring public debt remains on a sustainable path.
Under the big four plan, the government targets to boost manufacturing, enhance food and nutrition security, achieve universal health coverage and support the construction of affordable houses
Rotich increased import duty from 25 per cent to 35 per cent on iron ore and steel, paper and paper products in a move aimed at making local products more competitive in the region and beyond
MOBILE MONEY TRANSFER
Treasury CS Henry Rotich increases excise duty on mobile money transfer from 10 to 12 percent. Move aimed at getting more money for the universal healthcare.
“For the government to get a fair share of revenue from these financial activity and to finance critical government programmes I propose to introduce a Robin Hood tax of 0.05 percent of any amount of 500,000 shillings or more transferred through banks or other financial institutions.”
“In addition, I have increased exercise duty fee charged on money transfer services by cellular phone service providers from 10 percent to 12 percent. The revenue realised from these measures shall be used to fund universal healthcare.”
ON ECONOMIC GROWTH
“We project the economy to grow by at least 5.8 percent this year supported by growing investor confidence, improved agriculture activities bolstered by favourable weather…and improved demand for exports due to improved global and regional growth.”
ON BUDGET DEFICIT
“We project the fiscal deficit to narrow to 5.7 percent of GDP in 2018/19 from the estimated 7.2 percent of GDP in the 2017/18 financial year.”
ON LOCAL AND EXTERNAL BORROWING TARGETS
“(The deficit) will be financed by net external financing amounting to 297 billion Kenyan shillings equivalent to 3 percent of GDP (and) other domestic financing will amount to 271.9 billion Kenyan shillings equivalent to 2.8 percent of GDP,”
ON RATE CAP FOR COMMERCIAL BANKS
“The government is putting in place a package of reforms aimed at optimising lending to the private sector while at the same time encouraging innovation in the financial sector.”