MPs’ moment of pain as Rotich goes after their fuel guzzler vehicles

When National Treasury Cabinet Secretary Henry Rotich called it a budget to address poverty, inequality and unemployment, Members of Parliament applauded. At least they are neither poor nor jobless.

He warmed up to them by congratulating the new comers and those who had been re-elected in the fiercely contested 2017 General Election.

“I look forward to working closely with all of you in order to achieve our development goals,” said Mr Rotich sending the MPs into applause.

Rotich then went ahead to highlight the country had “come a long way since 2013” since President Uhuru Kenyatta took office. While highlighting the generous allocations to key sectors such as healthcare, agriculture and social programmes, the budget looked making a lot of sense on addressing poverty.

But the CS was not done. He turned on the taxation measures. The first sector was in manufacturing with the CS announcing an increase in import duty on iron and steel imports from 25 per cent to 35 per cent in order to protect local industries.

His protectionism measures extending to paper, textile, footwear, timber, furniture and vegetable oil were met with applause, but not loud to interrupt the speech.

But it was when he turned to tax measures under excise duty that MPs understood how Rotich wants them to help in funding the Sh3.07 trillion budget and perhaps why he had applauded them earlier on for winning election.

Excise duty on private passenger motor vehicles has for long been charged uniformly on irrespective of whether the engine has a high or low rating. But that is going to change.

“To ensure progressivity which is a cardinal principle of taxation, I propose to increase excise duty from 20 percent to 30 per cent on private passenger motor vehicles whose engine capacity exceeds 2500cc for diesel and 3000cc for petrol powered vehicles,” declared Rotich.

When he just read the background highlighting the two categories of vehicle engine, an MP was heard sneezing twice, though not enough to interrupt the CS. But when he just mentioned the tax increment from 20 to 30 per cent, without even mentioning the engine capacity, the mood in the house started changing.

The bespectacled Emurua Dikirr Constituency MP Johana Ngeno looked surprised. He followed the announcement keenly and then dropped his neck to his left, silently communicating the disagreement with the proposal.

Rotich had to raise his voice and communicate with finality even as MPs broke into loud murmurs as though to say “Nay!”

Mr Dikirr then nodded his head in disagreement as other MPs passed glances at each other in surprise. But Rotich only briefly smiled and cut short the interruption with another shocker.

“Our economy has a well-established financial sector in the region with significant sums of money transferred monthly,” he said.

“In order for the Government to get a fair share of revenue from these financial activities and to finance critical Government programmes, I propose to introduce a Robin Hood Tax of 0.05 per cent on any amounts of Sh500,000 or more transferred through banks and other financial institutions.”

Capital gains tax

This caught the MPs by surprise, sending them into loud murmurs even as Rotich looked un-deterred. Garissa Town MP Aden Duale, who also doubles up as Majority Leader of the National Assembly joined the members in protest.

Duale shook his head in disagreement as so did a couple of MPs seated behind him in a well-attended evening session.

House Speaker Justin Muturi had to swing into action with his “Order members! Order! The CS shall be heard in silence” to allow Rotich to continue with other tax measures. “You may applaud or express surprise but only for 10 seconds,” he directed sending the house into stitches.

The MPs followed keenly as Rotich turned to his earlier proposal to introduce a tax band of 35 per cent for those earning Sh750,000 per month and also increase of the capital gains tax from five per cent to 20 per cent. They sensed defeat, again, and murmured.

“However, during the public consultations on the Bill, members of the public raised concerns on these proposals and were of the view that the higher rates are not appropriate at this time,” Rotich said while smiling.

The House went into applause as Rotich said the proposals had been dropped. Budget Day had lived to its usual expectations: gaining one hand and losing through the other.

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