To change or not: Ruto's big tax headache

President William Ruto speaks during the National Breakfast Prayer meeting at Safari Park Hotel, Nairobi, on June 7, 2023. [Denish Ochieng, Standard]

There are indications that after months of posturing, the government is mulling some amendments to the Finance Bill, 2023 whose proposals to introduce a string of taxes have generated stiff opposition and outrage from a cross-section of Kenyans.

 In the last few weeks, amid widespread opposition, the government has acted tough, insisting that the Bill, which proposes a housing levy and an increase in fuel tax, must pass as it is.

President William Ruto has remained adamant that the three per cent Housing Fund levy aims to offer decent homes to slum dwellers, insisting employed Kenyans had a duty to help the underprivileged.

He and his lieutenants have always talked tough, vowing to surmount whatever resistance the opposition may throw at them. Ruto and Deputy President Rigathi Gachagua have recently, seemingly, threatened lawmakers in a bid to stem mounting opposition from within. 

All the while, concerned voices have stressed the need to "listen to the people", making reference to the National Assembly Finance Committee's public participation exercise that laid bare the unpopularity of proposals like the housing levy. 

Molo Member of Parliament Kimani Kuria, who chairs the Finance committee, recently said in a Citizen TV interview that they were "listening to Kenyans".

"The committee I chair and the Kenya Kwanza administration have made it clear that we are going to carry out our legislative work and our functions as mandated by the Constitution in an open manner," Kuria said.

His committee, currently retreating in Naivasha, is set to table its report on the Bill on Tuesday, with debate on it commencing on Wednesday.

Treasury Cabinet Secretary Njuguna Ndung'u and Acting Kenya Revenue Authority Commissioner General Risper Simiyu were expected in yesterday's session of the ongoing retreat to thrash out the public's and committee's proposals.

Among the considerations will be the views expressed in more than 1,000 memoranda it received and the oral submissions from more than 100 stakeholders.

There have been concerns about whether the government would yield to pressure and amend the contentious parts, especially in the face of the hardline stances the Executive has adopted.

On Thursday, National Assembly Majority Whip Silvanus Osoro hinted at changes but did not issue specifics as he divulged that there were "informal discussions" on some actions.

"The housing levy discussion, which is informal, is, maybe, to create moratorium structures for the employers... we really do not want to ambush employers," Osoro said in an interview on Citizen TV, stating that the grace period could be of "seven months, five months or three months."

The Federation of Kenya Employers has warned that the levy could see massive job cuts, arguing that it was unsustainable in the current economic times and has urged that it be made voluntary.

Osoro's remarks on the moratorium on the housing levy reveal that dropping the proposal may be off the cards, despite the criticism it has attracted.

Osoro also revealed that the "informal discussions" would also touch on the 15 per cent tax proposed to be levied on digital content creators and the transfer of zero-rated farm inputs to the exempt VAT category, a move that could increase the cost of fertilisers and pest control products.

Government operative Dennis Itumbi also recently responded to a tweet criticising the President for not listening to substantive issues raised by hustlers by promising that there would be changes.

"We are listening and engaging, and several changes will be reflected out of the robust public participation. For instance, tax on withdrawal of savings will NOT apply," he tweeted. 

In another tweet, who is among those nominated for a Chief Administrative Secretary job, referred to President Ruto's promise to content creators that he would review the proposal to introduce a 15 per cent withholding tax. 

But Prime Cabinet Secretary Musalia Mudavadi yesterday defended the Bill's proposals, stating that they were the result of an informed process.

"Do you really think the government of Kenya Kwanza has gotten those ideas and how to get out of this economic (situation) from nowhere?" Mudavadi said at a Public Service Commission event in Nairobi.

The government's stance has raised questions on the essence of public participation, which is constitutionally intended to inform every policy decision.

"Public participation cannot just be a cosmetic exercise for just ticking boxes. The court has already pronounced itself on what Article 10 means when it says there has to be public participation... the views of Kenyans must reflect in the final position," Nairobi Senator Edwin Sifuna said.

For weeks, the president and his deputy have played those employed against the unemployed, telling the latter that they should not oppose the levy as it would not affect them.

"We are telling the common mwananchi not to bother about those making noise. No one will deduct a cent from you because you are unemployed. The deductions will come once you have secured employment. Make noise when that time comes," Gachagua said yesterday in Meru.

They have come under fire for trying to force their way into having the new tax measures sail through a Parliament they essentially control, even as opposition lawmakers try to fight off what they argue is the capture of the House. 

"There are suggestions that MPs should disclose their vote when the Bill is tabled in Parliament, which I agree with... I am waiting to see any MP who will shoot down that Bill,” Ruto said on Sunday in Narok.

On his part, Gachagua has been whipping MPs from Mt Kenya to support the Bill amid concerns that he could be intimidating some who are opposed to it.

The opposition, too, has been accused of intimidating its members by insisting that they reject the Bill, labelling those who would support it as "traitors".

But it is the government that has taken the most heat, with the reported presence of Prof Ndung'u and Simiyu at the Finance Committee's retreat being read as interference.

"What are CSs doing in a parliamentary process? Once the proposals have come from the CS Treasury, it becomes the property of the House. The House should be dealing with this as members," said Kathiani MP Robert Mbui, who is also the National Assembly's deputy minority leader. 

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