Finance Bill 2022: National Assembly Finance Committee shoots down proposals to increase taxes

The National Assembly Finance Committee led by Homa Bay Woman Rep Gladys Wanga has rejected the proposals to increase taxes contained in the Finance Bill 2022.

The Finance Bill 2022 had been proposed by the National Treasury as new measures to help the government raise revenue by increasing taxes on a number of items including flour, motorcycles, alcoholic and non-alcoholic beverages, and petroleum products among others.

Treasury intended to generate an additional Sh51.6 billion from the Finance Bill's new tax increments.

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However, on Tuesday, MPs yielded to public pressure to shoot the tax proposals that would have resulted in inflation by hiking the cost of living.

The legislators recommended the lowering of VAT on LPG from the current 16% to 8% following an increase in the price of the commodities.

The committee also noted that if the current excise tax on alcohol and betting would have increased, Kenya would witness a rise in consumption of illicit brews.

“The proposal to increase excise duty on alcohol may encourage uptake of illicit alcohol. The government may not, therefore, achieve the intended purpose of the tax, which is to discourage drinking, and will therefore not realise the expected revenue,” read part of the report.

Proposals to increase excise duty of motorcycles were also shot down, with the MPs arguing that the boda boda industry had created employment to millions of Kenyans.

The report is set to be tabled in the National Assembly on Wednesday as the Finance Bill 2022 enters the second reading stage.