Written By John Mutiso 📝
Members of Parliament have rejected National Treasury proposals to increase taxes on basic food commodities and common household goods.
In a report tabled by Finance Committee chaired by Homabay County Woman Representative Gladys Wanga, MPs noted that passing the proposals would effectively leave the common man to bear responsibility for the increased costs.
“The Committee observes that imposing VAT on the commodities will increase the prices and we, therefore, reject the proposal and delete the amendment,” read the Committee report.
The Finance Bill included measures to increase revenue, with the goal of raising an additional Sh51.6 billion to support the budget.
The proposals which was tabled by Treasury Cabinet Secretary, Ukur Yatani, sought to increase the cost of maize, cassava flour, and cooking gas among other basic products.
The Wanga-led committee also proposed the reduction of VAT on Liquefied Petroleum Gas (LPG) from 16 per cent to 8 per cent.
The legislators also noted that the excise rate on beer was raised in the Finance Act 2021 and that manufacturers should be given more time before another increase. The rate is to be retained at Sh121.85 per litre.
“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.
The committee also rejected a proposal to charge excise duty on motorcycles, which would have seen their tax go up with the MPs arguing that the boda boda industry had created employment to millions of Kenyans.
The report will be tabled in the National Assembly on Wednesday, as the Finance Bill 2022 enters its second reading.