New taxes to cut government deficit to Sh400 billion

If Parliament approves the new tax recommendations proposed by President Uhuru Kenyatta, the government will raise at least Ksh130 billion.

The amount is spread out across the Value Added Tax (VAT) on petroleum products, the kerosene ‘adulteration’ tax, the levy on sugar confectionary, and on the National Housing Development Fund.

Application of a 1.5% tax on gross of basic salaries of workers adds to reduction of deficit seeking proposals.

Excise duty on mobile money transfer services as well as on on telephone and internet data service together with what will be levied on money transfer services by banks, money transfer agencies and other financial service providers also adds to the revenue generation kitty.

Tax on winnings within the gaming industry are also factored in to the Ksh130 billion.

According to Business Daily Africa (BD), Treasury Cabinet Secretary Henry Rotich told the National Assembly’s Finance and National Planning Committee the exact amounts expected from the proposed tax regime.

Around Ksh17.5 billion is expected from the 8% VAT on petroleum products, with Ksh9.8 billion from the “kerosene adulteration” tax.

RELATED : WILL MPS SAVE KENYANS FROM THESE TAXES?

Ksh473 million is due from the imposition of Ksh20 per kilogramme on sugar confectionary, a duty that will also be levied on white chocolate.

The 1.5% tax on National Housing Development Fund will generate about Ksh57 billion a year, although it is expected to be rolled out in January 2019 meaning the government must still find alternatives for the remainder of the year.

Tax on basic salaries will raise around Ksh57 billion, while the tax on money transfers in general is estimated to rake in around Ksh20.2 billion.

For the gaming industry, a combination of the reduction of gaming tax from the current 35% to 15%  and introduction of a 20% tax on winnings is expected to raise Sh25 billion, according to BD.

The tax recommendations, offered by President Uhuru Kenyatta in a bid to plug the Ksh530 billion deficit, will be debated in Parliament on September 20.

SEE ALSO : KEMU NAIROBI CAMPUS UP FOR SALE