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MPs have made several important amendments to the controversial Finance Bill, which is to be tabled in the National Assembly this morning.

Key among the changes is one that will affect the manufacturing sector, with the Finance and Planning Committee offering a number of reliefs to support local companies through deletion of Excise Duty on local products.

It has also increased the exports and investments promotions levy on imported products. Among the products to be affected by the exports and investments promotions levy are cement, clinker, metal bars and iron rods. Further, local products, including sugar, have been protected against increases in Excise Duty.

Committee chair Kuria Kimani, also the Molo MP, said in the digital and creative economy, the committee adopted the proposal in the bill to exclude locally manufactured cellular phones from Excise Duty.

However, he said there was need to introduce tax on digital transactions. Over the years, such assets have not been captured in the taxation system yet they generate millions of shillings in transactions.

There was, however, some relief for digital content creators. “To support the creative economy, the committee noted the importance of supporting content creators and as such reduced withholding tax from the proposed 15 to three per cent,” said Kimani at a press conference last evening.

Electric vehicles

The committee noted the negative impact of retaining VAT on petroleum at eight per cent, arguing that the negatives far outweigh the positives.

The government, he said, stands to lose as petrol businesses become perpetual creditors, which reduces quality of services that the government gives citizens.

 “This calls for an end to the subsidised rate of eight per cent,” the committee notes. “The cost of living has been on the rise not only in Kenya but all over the world. The committee appreciates the impact of increasing VAT on petroleum products as proposed in the Bill from eight to 16 per cent.”

Actions to address climate change and global warming will also get some reliefs as the government seeks to go green by 2030.

The committee, Kimani said, had adopted several proposals from stakeholders, among them zero rating assembly of electric vehicles and buses, liquefied petroleum gas (LPG) and clean cooking stoves among others. These will help to address issues like pollution in cities and use of wood for cooking.

There was also something for small businesses.

To cushion hustlers, the committee has agreed to protect small businesses by charging Turnover Tax on businesses with a turnover of Sh500,000 annually. The tax will now apply to business grossing Sh1,000,000 and above per year. The committee has also agreed to lower the maximum threshold from Sh50 million to Sh25 million.

Other changes touch on the controversial three per cent deduction for the Housing levy, which has been reduced to 1.5 per cent.

The levy was the main talking point in the Finance Bill, 2023 public participation hearings, with calls for it to be dropped altogether.

Although the government has backed down, it has maintained the levy at a lower rate and employers will be required to match employee contributions shilling-for-shilling.

Kuria said the committee was also considering other amendments as suggested by Kenyans during the public hearings.

Azimio setback

The committee is facing tough times as it seeks to balance generating revenue for the government in the 2023/2024 Budget, while at the same time bearing in mind the harsh economic times occasioned by the high cost of living.

Debate on the Bill is expected to be heated when it is tabled in the House this morning.

The Minority side, Azimio la Umoja, has marshaled its members to vote against the Bill. However, it suffered a setback when some of its members were suspended from attending Parliament for two weeks after they were involved in a fracas over the aborted removal of Nominated MP Sabina Chege from her position as Minority Whip.

Seven MPs, many of them from Azimio, were suspended when Speaker Moses Wetang’ula ordered the Sergeant-at-Arms to eject them from the House.

With the differences in numbers being razor thin, the suspension could hurt Azimio, making it easier for the ruling Kenya Kwanza to pass the Bill which requires a simple majority.

President William Ruto last month hosted Kenya Kwanza MPs at State House where he drummed up support for the Bill.

The President offered various goodies to the legislators, including the promise to build 200 affordable houses in every constituency.

Yesterday’s move by Jubilee Party MPs, who wrote to Azimio expressing their desire to quit the coalition will also affect voting patterns in the House. The rebel MPs have already expressed willingness to work with Kenya Kwanza, a move that Azimio leader Raila Odinga has protested at, describing it as an attack on democracy and the spirit of multi-party politics.

Undecided

When President Ruto toured Kirinyaga yesterday, several MPs said they support the Bill.

“As Mwea, we need roads and we don’t want you to borrow any money and we support the Finance Bill,” said Ndia MP George Kariuki.

In Western Kenya, however, only two out of 11 MPs support the Bill. Seven have expressly said they will vote against it while two have been blowing hot and cold (see separate story).

Given how divisive the Bill has been, whether it sails through or not will depend on how many MPs show up to vote.

This, however, could also be complicated by the sizeable number of MPs on both sides who have not yet made their stance clear and who could vote either way.

However, with the President having called for open voting, and saying he was watching keenly to see who would vote against the Bill, there are those who will have to balance between voting to be seen to be working with the government or voting based on the feedback they have received from their constituents.

In Kisii, for instance, wananchi warned an MP against voting for the Bill and threatened dire consequences if he does.

However, Speaker Moses Wetang’ula offered the MPs some reprieve at the weekend when he said the legislators will be given an opportunity to vote for the Bill clause by clause rather than as one document.