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What are the controversial parts of the Finance bill?

The Finance Bill 2024 in Kenya has sparked significant controversy and public outcry, leading to widespread protests and clashes with law enforcement. The bill, which is part of Kenya's 2024/25 budget, proposes several tax hikes and other fiscal measures aimed at increasing government revenue. Below, I will outline the key controversial aspects of the Finance Bill 2024.

Table of Contents

  1. Introduction

  2. Key Controversial Provisions

    1. Income Tax Increases

    2. VAT Adjustments

    3. Excise Duty Hikes

    4. Digital Services Tax

    5. Housing Levy

  3. Public Reaction and Protests

  4. Government Response

  5. Conclusion

  6. Sources

1. Introduction

The Finance Bill 2024 has been a focal point of contention in Kenya, primarily due to its proposed tax increases and other fiscal measures. These measures are seen by many as burdensome, especially in the context of the current economic climate. The bill has led to significant public protests, some of which have turned violent, resulting in casualties and property damage.

2. Key Controversial Provisions

2.1 Income Tax Increases

One of the most contentious aspects of the Finance Bill 2024 is the proposed increase in income tax rates. The bill suggests higher tax rates for individuals and corporations, which many argue will reduce disposable income and stifle business growth. The increased tax burden is seen as particularly harsh on middle and lower-income earners, who are already struggling with the high cost of living.

2.2 VAT Adjustments

The bill proposes adjustments to the Value Added Tax (VAT) regime, including increasing the VAT rate on essential goods and services. This move has been criticized for its potential to increase the cost of basic necessities, thereby disproportionately affecting the poorer segments of the population. The VAT adjustments are seen as regressive, placing a heavier burden on those least able to afford it.

2.3 Excise Duty Hikes

Another controversial provision is the hike in excise duties on various products, including fuel, alcohol, and tobacco. The increase in fuel excise duty is particularly contentious, as it is expected to lead to higher transportation costs, which will, in turn, drive up the prices of goods and services across the board. This has raised concerns about inflation and the overall cost of living.

2.4 Digital Services Tax

The introduction of a digital services tax is also a point of contention. This tax targets revenues generated by digital platforms and services, including social media, e-commerce, and online advertising. Critics argue that this tax could stifle innovation and growth in the digital economy, which is a vital sector for Kenya's future economic development.

2.5 Housing Levy

The bill includes a proposal for a mandatory housing levy, which requires both employers and employees to contribute a percentage of their salaries towards a national housing fund. This levy is intended to finance affordable housing projects. However, it has been met with resistance from both employers and employees, who view it as an additional financial burden.

3. Public Reaction and Protests

The Finance Bill 2024 has triggered widespread protests across Kenya. Demonstrators have taken to the streets in various cities, expressing their dissatisfaction with the proposed tax hikes and other measures. The protests have sometimes turned violent, resulting in clashes with police, casualties, and significant property damage, including the burning of parts of the parliament building.

The public outcry is rooted in the perception that the bill's provisions are unfair and will exacerbate the economic hardships faced by many Kenyans. The protests reflect a broader discontent with the government's fiscal policies and a demand for more equitable and sustainable economic measures.

4. Government Response

In response to the public backlash, the Kenyan government has made some amendments to the Finance Bill 2024, removing certain controversial clauses. However, these amendments have not fully addressed the concerns of the protesters, and the bill was nonetheless passed by Parliament. President William Ruto initially declined to sign the bill into law, sending it back to Parliament for further review. Despite these efforts, the protests have continued, indicating that the amendments were insufficient to quell public discontent.

5. Conclusion

The Finance Bill 2024 remains a highly contentious piece of legislation in Kenya. Its proposed tax increases and other fiscal measures have sparked significant public outcry and protests, highlighting the challenges of balancing government revenue needs with the economic well-being of the population. The government's response, including amendments to the bill, has so far been unable to fully address the concerns of the public, suggesting that further dialogue and revisions may be necessary to achieve a more acceptable and equitable fiscal policy.

6. Sources

  • ABC News

  • AP News

  • Al Jazeera

  • CNN

  • AA

  • CBS News

  • BBC

  • Parliament of Kenya

  • Context

  • NBC News

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