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What are the controversial parts of the Finance bill?
The Finance Bill 2024 has sparked significant controversy and public outcry in Kenya. This bill, part of Kenya's 2024/25 budget, proposes several tax hikes and changes to the tax system, which have led to widespread protests and even violent clashes. Below, I will outline the key controversial aspects of the Finance Bill 2024.
Table of Contents
Introduction
Key Controversial Provisions
Increased VAT on Fuel
Housing Levy
Digital Services Tax
Excise Duty on Mobile Money Transfers
Income Tax Adjustments
Public Reaction and Protests
Government's Response
Conclusion
1. Introduction
The Finance Bill 2024 has been a focal point of contention in Kenya, primarily due to its proposed tax increases and new levies aimed at boosting government revenue. These measures have been met with resistance from various sectors of society, including the general public, business community, and political opposition. The bill's passage through Parliament has not been smooth, with significant amendments and debates marking its journey.
2. Key Controversial Provisions
2.1 Increased VAT on Fuel
One of the most contentious elements of the Finance Bill 2024 is the proposed increase in Value Added Tax (VAT) on fuel. The bill suggests raising the VAT on petroleum products from 8% to 16%. This move is expected to have a ripple effect on the cost of living, as fuel prices directly impact transportation and production costs across various sectors.
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2.2 Housing Levy
The bill introduces a mandatory housing levy, which requires employees to contribute 1.5% of their gross salary towards a national housing fund. Employers are also required to match this contribution. Critics argue that this levy places an additional financial burden on both employees and employers, especially in an already strained economic environment.
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2.3 Digital Services Tax
The Finance Bill 2024 proposes a digital services tax aimed at online businesses and digital transactions. This tax targets revenues generated from digital platforms, including social media advertising, online marketplaces, and streaming services. The business community has raised concerns about the potential negative impact on the digital economy and innovation.
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2.4 Excise Duty on Mobile Money Transfers
Another controversial provision is the increase in excise duty on mobile money transfers. The bill proposes raising the excise duty from 12% to 15%. Given the widespread use of mobile money services in Kenya, this increase is expected to affect a large portion of the population, particularly those who rely on these services for daily transactions.
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2.5 Income Tax Adjustments
The bill also includes adjustments to income tax brackets and rates. These changes are aimed at increasing tax revenue but have been criticized for potentially reducing disposable income for middle and lower-income earners. The adjustments include higher tax rates for higher income brackets, which some argue could discourage investment and economic growth.
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3. Public Reaction and Protests
The introduction and subsequent passage of the Finance Bill 2024 have led to widespread protests across Kenya. Demonstrators have taken to the streets in major cities, including Nairobi, to express their dissatisfaction with the proposed tax hikes. The protests have sometimes turned violent, resulting in clashes with police, property damage, and even fatalities.
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4. Government's Response
In response to the public outcry and protests, the Kenyan government has made some amendments to the Finance Bill 2024. Certain controversial clauses have been removed or modified in an attempt to address the concerns raised by various stakeholders. However, despite these amendments, the bill has still faced significant opposition.
President William Ruto initially supported the bill but later withdrew his support following the intense backlash. The bill has been sent back to Parliament for further review and possible revisions.
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5. Conclusion
The Finance Bill 2024 has undoubtedly been one of the most controversial pieces of legislation in recent Kenyan history. Its proposed tax increases and new levies have sparked widespread protests and significant public debate. While the government has made some concessions, the bill's future remains uncertain as it continues to face strong opposition from various quarters.
The ongoing discussions and potential revisions to the bill will be crucial in determining its final form and impact on the Kenyan economy and society.
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Answered by mwakili.com