Finance Bill 2024: Govt Makes U-Turn, Drops Unpopular Clauses

The government has backtracked on several controversial clauses initially proposed in the Finance Bill of 2024. The National Assembly's Finance Committee Chair Kimani Kuria announced major amendments to the proposed law after Kenya Kwanza MPs met President William Ruto for a Parliamentary Group meeting on Tuesday, June 18.

One of the most contentious proposals was related to the introduction of the Motor Vehicle Tax at 2.5% of the vehicle's value. The proposal has been dropped entirely.

In another critical amendment, the Finance Bill will no longer include a proposed 16% VAT on bread, a measure that sparked widespread criticism for its potential to increase the already high cost of living. The proposal to amend the Data Privacy Act and allow Kenya Revenue Authority (KRA) access to taxpayers' financial transactions was also dropped.

Also Read: Finance Bill 2024: Full Statement Announcing Amendments at State House PG

Similarly, excise duties on vegetable oil and VAT on transportation of sugar have been scrapped, addressing fears of inflationary pressures on essential commodities.

Furthermore, the Eco Levy on locally manufactured products has been removed, reflecting a shift towards supporting domestic industries without imposing additional costs.

Small businesses and farmers have reason to celebrate as well, with the exemption of those with turnovers below Ksh1 million from the controversial eTims system. This adjustment is seen as a positive step towards easing compliance requirements and fostering growth within the informal sector.

The government has introduced excise duties on imported table eggs, onions, and potatoes. This measure is intended to shield local farmers from unfair competition and bolster Kenya's food security initiatives.

The amended Finance Bill will also maintain current rates for mobile money transfers, dispelling concerns of increased transaction costs for mobile banking users. Additionally, VAT on financial services and foreign exchange transactions has been eliminated, promoting financial inclusivity and reducing transactional barriers.

The threshold for VAT registration has been raised from Ksh5 million to Ksh8 million. This adjustment aims to relieve administrative burdens on smaller businesses, allowing them to focus on growth and sustainability.

The proposal to introduce tax on sanitary pads and towels was also done away with in the amended Finance Bill of 2024.

Kuria noted that the government was keen on balancing fiscal prudence with social welfare, acknowledging the importance of responsive governance in meeting the needs of all Kenyans. The Molo MP emphasized ongoing efforts to fine-tune fiscal policies in consultation with stakeholders, ensuring that future measures align with economic realities and public expectations.