Public hearings on Finance Bill, 2023: What's been said so far

Public Hearings on the Finance Bill, 2023 entered the second day on Tuesday with the Institute of Economic Affairs first to present its views.

The week-long hearings, which started on Monday, are being conducted by the Departmental Committee on Finance and National Planning chaired by Molo MP, Kimani Kuria.

The Bill's timeline of approval is June 30 which will coincide with the enactment of the Appropriation Law, 2023.

The Bill, which contains 84 clauses, seeks to amend various tax laws and related statutes to expand the tax base and allow the Kenya Revenue Authority to generate more revenue, especially from areas that have traditionally not effectively participated in contributing to the country’s tax basket.

Among the entities making presentations on Tuesday is the Institute of Economic Affairs led by chief executive officer Kwame Owino.

PricewaterhouseCoopers Limited led by Job Kabochi, Director and Edna Gitachu, Associate Director and a section of their clients are also presenting their views.

On Monday, the Law Society of Kenya, WestMinister Consulting and Anjarwalla and Khanna Advocates were among the entities that gave their views to the committee.

Officials of the entities gave their misgivings about the proposed tax laws saying the increase in taxation should not just be about revenue generation.

They said care should be taken to ensure that more revenue is generated without constraining the country's economic growth.

While pointing out that the tax burden should be shared equally in line with Article 201 of the Constitution, LSK President Eric Theuri told the committee that the society was opposed to the National Housing Development Fund.

He faulted the government's plan to impose a mandatory contribution arguing that contributions should be voluntary and not imposed through the enactment of a law.

LSK and Anjarwalla and Khanna Advocates also opposed the proposal 15 per cent withholding tax on content creation and the creative sector in Kenya.

They proposed that the withholding tax be reduced to five per cent to allow growth in the sector.

The lawyers further advised KRA to embrace alternative dispute resolution mechanisms to avert long litigation processes in their quest to recover revenue owed to them.

They said this will enable the taxman to meet their targets and still encourage firms to meet their tax obligations.

On their part, WestMinister Consulting opposed the proposal to impose a 16 per cent tax on petroleum products.

The consulting firm argued that this would likely impact adversely on the already high cost of living. 

The law firm further pointed out that imposing a 16 per cent tax on petroleum but exempting LPG from VAT will impoverish the poor in society and benefit the privileged.

WestMinister Consulting further told the Committee to consider exempting organisations that run school feeding programmes from VAT.

They argued that this will ease the financial burden on the organisations who largely rely on donations to feed underprivileged pupils in schools.

The consulting firm further expressed reservation on the proposal to impose a 10 per cent levy on imported goods for home use.

They argued that the tax would have far-reaching implications on the manufacturing sector as the tax would affect things like paper products, cement clinkers and steel products.

The firm said there are better ways of protecting local industries against unfair trade practices instead of imposing the 10 per cent levy on the imported products.

Proposals in the Finance Bill, 2023 have generated interest from Kenyans as it mostly touches on taxation of the most basic commodities.  

As the public hearings got underway, chairperson Kuria told the committee members to remain committed to the cause even though the exercise may force them to sit long hours.

"I seek your indulgence to endure long sittings to listen in to the numerous submissions we project will be made on this proposed legislation," Kimani said.