Published on: May 29, 2024 11:12 (EAT)
LSK President Faith Odhiambo in a past press address. Photo: Law Society of Kenya/X
The Law Society of Kenya (LSK) has told members of the National Assembly Finance and Planning Committee that the Finance Bill 2024 will inflict more pain on low-income households that form the majority of Kenya’s taxpayers.
While making presentations before the Kuria Kimani-led committee, LSK President Faith Odhiambo and Vice President Mwaura Kabata warned that the bill introduces new layers of taxes to essential household goods.
“Standard rating bread will increase its cost. Given the regressive nature of VAT, this change will disproportionately affect lower income households,” noted LSK.
The Bill has proposed to increase excise duty rates from 15% to 20%. This will apply on telephone and internet data services, fees charged for money transfer services by banks, money transfer agencies and other financial service providers and Fees charged for money transfer services by cellular phone service providers and payment service providers licensed under the National Payment System Act, 2011.
LSK told MPs that considering the crucial roles that internet data, telephone services, and mobile money transfers play in business operations, this proposed amendment is expected to negatively impact the overall cost of doing business in Kenya.
The lawyers’ body added that small business enterprises, which rely heavily on phone-based transactions and communications, will be particularly affected, potentially facing increased operational expenses and financial challenges.
“This proposal will also significantly hinder financial inclusivity. Many Kenyans, especially those in rural areas, remain unbanked and rely heavily on mobile money transfer services and internet access for their financial transactions. Increasing the excise duty on these essential services will make them more expensive and less accessible, disproportionately impacting these communities,” Odhiambo further told the public hearing of the Bill.
“We propose that this proposal be dropped,” LSK submitted.
LSK in its presentation also called for a total rejection of various clauses in the Bill that it says is unconstitutional and can be challenged in court.