‘Finance Bill likely to condemn more Kenyans to poverty’ – Gideon Moi

Tuesday, June 11th, 2024 14:11 | By
From Left: Mwangi wa Iria, Kalonzo Musyoka, Gideon Moi and Eugene Wamalwa
From Left: Mwangi wa Iria, Kalonzo Musyoka, Gideon Moi and Eugene Wamalwa. PHOTO/@EugeneLWamalwa/X

Kenya African National Union (KANU) chairman Gideon Moi has voiced his concern over the proposed 2024 Finance Bill.

According to the former Baringo senator, the bill will plunge many Kenyans into poverty if passed by the National Assembly.

"The Finance Bill, 2024, contains punitive tax proposals on individuals, households, and businesses, amidst tough economic times. If not carefully revised, it is likely to condemn more Kenyans to poverty.

"Economic experts, think tanks, and the general public have highlighted the pain points in the bill, cautioning that, if enacted in its current form, it will disproportionately diminish Kenyans’ purchasing power by raiding their disposable incomes, affecting livelihoods, and driving businesses out of the economy," the former Baringo Senator argued in a statement shared on his X handle on Tuesday, June 11, 2024.

Moi has called on the National Assembly committee handling the bill to ensure that the final report captures what the people want.

"Therefore, the National Assembly Finance and Planning Committee must ensure that its final report reflects the opinions, concerns, and aspirations of Kenyans on the bill.

"This is an opportunity for the committee to redeem itself from the superficial public participation exercises it subjected Kenyans to in the 2023/2024 financial year, where public input was largely disregarded in the final report presented to the National Assembly," he added.

Moi argued that sustainable taxation frameworks globally are predicated on a favourable business environment that spurs economic growth, expands the tax base by bringing more people into the tax bracket, and increases tax revenues. He says the Kenya Kwanza government's tax collection approach is not good for the economy.

"However, the government’s approach to aggressively exacting tax beyond the point of elasticity during an economic downturn will inevitably reduce tax revenue. Ultimately, the Finance Bill will be self-defeatist, as evidenced in the National Treasury's report in May that KRA fell short of its projected tax revenue collections.

"Specifically, the proposal to impose excise duty and VAT on essential financial services contradicts the country’s goal of financial inclusion to combat poverty and inequality. Many Kenyans rely on services like Mpesa to transfer money to their dependents for their basic needs. It is a dent in our national conscience to erroneously treat these transfers as taxable incomes," he added.

Motor vehicle tax

The proposed motor vehicle taxation is the most controversial part of the bill, and Moi, the son of Kenya's first retired president, said the move will negatively affect insurance firms.

"The motor vehicle circulation tax, in addition to constituting double taxation, mandates insurance companies to collect this highly unpopular tax with penalties for non-compliance. It is a no-brainer that its administration will de-incentivize the insurance sector, discourage comprehensive insurance uptake, and push car owners to third-party insurance," Moi stated.

The KANU chair also warned against over-taxation of basic food commodities.

"It must also not be lost on the government that starvation and malnutrition still afflict many people, especially children. Increasing taxes on basic household food items like bread will inevitably compound these problems.

"At this point, Kenyans' hope solely lies with the National Assembly to amend the bill to alleviate the burden of overtaxation," he said.

Kalonzo Musyoka, Moi's partner in the opposition outfit Azimio la Umoja-One Kenya Alliance, also voiced his concern over the Finance Bill.

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