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More Kenyan taxes are on the way as the Kenyan government through President Ruto has revealed plans to introduce a new set of taxes if the Court stops the Finance Act of 2023.
The Finance Act, which includes some fresh taxes, such as higher excise duty on fuel and a new motorcycle tax, was passed by Parliament in June but a case was subsequently raised to challenge it.
Depending on how the hearing of this case goes, the High Court may end up approving pr blocking the Finance Act.
As a backup plan in case it gets blocked, the Ruto-led administration has made plans to introduce a motor vehicle circulation tax, excise and value-added tax (VAT) measures.
There will be a new car tax which would be calculated according to the worth of the car, and the VAT would be increased from 16% to 18%.
The authorities plan to submit this plan to Parliament by the end of October, to meet the Sh2.57 trillion ordinary revenue target in the present financial year, and prevent debt increment.
Back in 2011/12, ordinary revenue made up 71.9% of the country’s budget but it has experienced a serious decline, as in 2021/22, taxes only made up 56.8% of its budget.
There have been street protests over the high cost of living and controversial taxes which disturbed business activities in towns such as Nairobi, Kisii, Mombasa, and Nakuru.
However, the International Monetary Fund (IMF) has advised the Ruto-led administration not to waiver or give in to the protesters. It advised them to stick to their guns.
The Kenya Revenue Authority (KRA) recently revealed that it had generated a revenue of Sh2.166 trillion in the financial year which ended in June against a target of Sh2.273 trillion, which means that there was a shortfall of Sh107 billion.
This could force the Treasury to put in place tax measures to help the government hit its target in the present financial year.
More Kenyan Taxes: Shedding More Light on The Finance Act Case in Court
Last month, the High Court suspended the execution of the Finance Act and referred the matter to Chief Justice Martha Koome.
However, the Energy and Petroleum Regulatory Authority (EPRA) ignored this and implemented a 16% VAT in its review of prices.
The Chief Justice has assigned a three-judge bench to hear the case defying the execution of the Finance Act, 2023.
Protests Turn Violent as Kenyans Rise Against Tax Increment
Due to the increment of taxation in Kenya, there have been numerous street protests by concerned taxpayers.
These protests, however, have started getting violent as teargas and live ammunition are now being deployed to control the turmoil.
Protests were also arranged by the former presidential candidate Raila Odinga, who claims that the 2022 election was stolen from him, and this has led to mistrust in the present administration.
On the 14th of July, nine people were reported dead while 300 were arrested. This unfortunate incident was blamed on police brutality.
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