- The Finance Bill, 2023 among others, proposes an increase in the National Hospital Insurance Fund contribution, especially for high-income earners.
- It introduces a mandatory 3% deduction of salary to the Housing Fund and raises taxes from 30% to 35% for those earning Sh500,000 and above.
The stage is set for a showdown between President William Ruto's troops and Azimio leader Raila Odinga's lieutenants over what critics have termed punitive taxation laws.
Ruto calls them essential to fix the economy.
President Ruto has led the new administration in defending the proposed taxes with his MPs in the National Assembly promising they will pass the law as drafted by Treasury.
However, Raila and his brigade have pledged to resist any attempt to push through the legislation, saying it will make the already high cost of living intolerable.
The Finance Bill 2023 is scheduled for debate as soon as MPs return from recess on June 5.
Ruto and Raila set the tempo for the looming clash during the burial of freedom fighter Mukami Kimathi on Saturday.
Ruto accused Raila and former President Uhuru Kenyatta of causing the country's financial mess because of over-borrowing.
“I am a good student of former President Mwai Kibaki. When he took over the government, the tax was at Sh200 billion, through his brains he pushed the tax to almost Sh1 trillion” Ruto said.
“Kibaki realised that one cannot run a country through debts, but through coming up with tax measures. Give me a chance to plan further,” he said during the burial of Mukami Kimathi in Nyandarua on Saturday.
The head of state was responding to Raila who had told Ruto to his face that the new tax proposals were not well thought out
“Sometimes, you can milk a cow too much until only blood comes out. You promised to fight for hustlers, now mama mboga are being oppressed as they go about their mama mboga businesses.”
“We have seen small businesses such as digital jobs and beauty being taxed. Is that fair? A government has to tax people to offer services but over-taxing them only makes matters worse,” he said.
Pressure has been piling on the National Assembly to reject the proposed taxes but Ruto men — who control the House — have pledged to pass the Bill without amendment.
Majority Whip Sylvanus Osoro said the government allied-MPs will pass the Bill, as the government never loses.
“With the fact that the government does not lose, I want to assure you (Ruto) that even the Finance Bill will pass,” he said last week.
On Sunday, National Assembly Budget and Appropriations Committee chairman Ndindi Nyoro promoted the new taxes.
The Kiharu MP argued the unpopular taxes would help the government get out of its financial crisis.
“Mr President, you came to the government where public debt is Sh9 trillion. Inflation was almost going to double digits, and 36 per cent of the able workforce had no jobs,” he said.
“You had a choice to continue keeping us in bliss and enjoying ourselves in oblivion or make the hard choices. Make us tighten our belts now for us to have long-term stability in the future,” Nyoro said.
Raila’s Azimio troops, however, have hit out at the State for the many taxes and urged it to be innovative in its revenue-raising measures.
Kakamega Governor Fernandez Baraza charged that it was counterproductive for the government to impose many taxes if it wants to transform the economy.
“You cannot achieve economic transformation by overtaxing Kenyans. That is why we are now calling upon the National Assembly to stand up and be guided by the principle of conscience, so they don't push this agenda on a partisan basis,” he said.
Yesterday, seasoned trade unionist Seth Panyako, who is the secretary general of the Kenya Union of Nurses, took on the President, accusing him of betraying Kenyans with a welter of taxes.
“We promised Kenyans we shall lower the cost of doing business, that we shall lower the eight per cent VAT on petroleum," he said. "Today, that VAT has been increased, while the VAT for helicopters has been removed. How many Kenyans own helicopters?”
(Edited by V. Graham)