President Uhuru Kenyatta is set to sign new laws enforcing taxes that could increase the cost of bank loans, Internet access, and mobile phone calls starting July 1st.
MPs raised the excise charge on airtime and data from 15% to 20%, raising at least Sh8 billion for the Treasury from Safaricom, Airtel, and Telkom Kenya.
This proposal was not included in the Finance Bill, and it is unclear whether the President will support the airtime tax despite the fact that it was not included in the Treasury’s plans.
The excise levy on bank loan costs will cost the government more than Sh7 billion per year, potentially increasing the cost of lending for households and companies as lenders shift the burden to borrowers.
Parliament gave its approval following a study of the Finance Bill, which contains taxing measures for the next fiscal year, which begins in July.
This puts the spotlight on President Kenyatta, whose signature is required to give the Finance Bill, 2021, legal power.
Safaricom CEO Peter Ndegwa said the new tax burden will be transfered to customers, signalling an increase in airtime and data charges.
“This being a consumption tax, the burden, unfortunately, has to be absorbed by customers,” Peter Ndegwa, the Safaricom CEO, said.
“Our plea to the government is to rethink this tax increase given the current economic environment. Mobile services have come to support a majority of people who have been negatively impacted by the Covid-19 pandemic relying on mobile services to work from home, learn or earn a living. The increase will thus only intensify the negative impact on our people.”
According to the Budget and Appropriations Committee report, the Treasury is aiming for Sh2.04 trillion in total income, up from Sh1.83 trillion.
