How the Govt Plans to Fill Tax Gap Caused by Finance Bill Fall

Kenyans will dig deeper into their pockets for essential government services as the Treasury targets a significant increase in revenue from administrative fees. The aim is to plug a budget hole left by the scrapping of new taxes proposed in the recently withdrawn Finance Bill 2024.

The new financial year starting July 1st will see a surge in fees for obtaining national IDs, passports, work permits, and even marriage certificates. This comes after the government gazetted fee hikes in November 2023.

The Treasury is aiming to collect at least Ksh55.8 billion from administrative fees and charges for services in the next financial year, a significant jump from Ksh28.3 billion collected this year.

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Highlights of the Fee Increases:

• National Identity Cards: First-time applicants for IDs, previously issued free of charge, will now pay Ksh1,000. Replacing a lost or damaged ID will cost Ksh2,000, a tenfold increase from the earlier Ksh100 fee.
• Passports: The cost of acquiring an ordinary passport has risen to Ksh7,500 from Ksh4,500.

Impact on Foreign Residents and Expats:

• Alien Cards: Foreign nationals residing in Kenya will see a steeper hike in their Alien Card fees. The cost for a new card jumps to Ksh5,000 from Ksh1,000, and the penalty for not having one increases tenfold to Ksh10,000.
• Citizenship and Permanent Residency: The application process for Kenyan citizenship by marriage now carries a Ksh100,000 price tag, compared to the previous Ksh30,000. East African nationals seeking citizenship will pay Ksh50,000, a significant rise from Ksh5,000. Ex-Kenyan citizens seeking permanent residence face Ksh50,000 for application processing and a combined Sh175,000 for certificate issuance fees.

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The Ministry of Interior defended the fee hikes as necessary for self-reliance in financing the national budget and reducing reliance on debt. 

"The intended revised charges, fees and levies are informed by the need for Kenya’s self-reliance in financing the national budget, to wean the country from unsustainable debt that poses grave threats to our sovereignty and the dignity of future generations,” the ministry stated.

However, critics have warned that higher immigration fees could make Kenya a less attractive destination for expats and multinational companies.

The Ministry of Interior has offered a potential way out for low-income Kenyans. They have promised to waive the ID application fee for those who can demonstrate financial hardship.

Kenyans can expect to see these fee increases implemented in the coming months. The move comes alongside other recent hikes in government service charges, such as increased entrance fees for national parks. 

The trend is likely to put a strain on household budgets and may require Kenyans to factor in these additional costs when planning for essential services.

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