Skip to main content
June 18, 2018

How government plans to raise additional Sh27.5bn in tax revenue

MPs following proceedings during the presentation of the budget estimates on Thursday, June 14, 2018. /JACK OWUOR
MPs following proceedings during the presentation of the budget estimates on Thursday, June 14, 2018. /JACK OWUOR

The government has proposed a number of measures it intends to undertake to generate an additional Sh27.5 billion in tax revenue for the 2018/19 financial year.

These include levying of 35 per cent tax on a wide range of steel and iron products and similar tax rate on some paper and paper board.

Treasury CS Henry Rotich said the government t will further levy a 5 US dollar per unit or 35 per cent tax on textile and footwear, whichever is higher.

"Our textile and footwear sector are closing down due to increased unfair competition from cheap imported textiles and footwear as well as second-hand clothing and footwear," he said.

To support the literacy programme, Rotich exempted parts imported or purchased locally for the assembly of these laptops in the country.

"In order to further promote the penetration of ICT in our economy, I propose to further exempt from VAT, parts imported or purchased locally for the assembly of computers. This will encourage local manufacturing, innovation and job creation," he said.

As a measure to deal with fuel adulteration, Rotich introduced excise duty on kerosene to Sh10,305 per 1,000 litres.

This now puts taxation on kerosene at par with petrol. Previously, kerosene was taxed at Sh7,205 per 1,000 litres.

"The difference in the rates applicable to these two petroleum products has led to adulteration of the fuel products resulting in loss of excise duty revenue to the Exchequer. In order to reduce the incidence of adulteration of fuels, I propose to harmonise the rate of excise duty applicable on illuminating kerosene to Sh10,305 per 1,000 litres," Rotich said.

Also read: Mobile money transfer charges to go up as Rotich increases duty to 12%

Rotich, however, retained the current income tax rates after what he said were concerns raised by members of the public over proposed increments.

He said he had proposed to introduce a 35 per cent tax on incomes above Sh750,000 per month and raise capital gains tax from 5 per cent to 20 per cent, but this was shelved after public outcry.

Small business owners have been slapped with a 15 per cent tax on permits and trading licenses.

Rotich also proposed amendments to the Income Tax Act for withholding tax on winnings to be used for the development of sports, arts and cultural activities for the youth, as well as critical social development initiatives including Universal Health Care.

The CS also slapped a 20 per cent penalty and two per cent interest on late payment of tax in the Betting, Lotteries and Gaming Act.

"This will enhance the collection of these taxes that are meant to support sports, arts, cultural and social development activities in our country," he said.

As a measure to stem the tide against vandalism of public infrastructure, Rotich imposed 20 per cent export levy on copper waste and scrap metals.

Click here for the latest political news

 

STAR COMMUNITY POLICY AND PARTICIPATION GUIDLINES

Poll of the day