- Raila had last week called for a radical surgery on the Finance Bill, 2024 saying most of the tax proposals “are as insensitive as they are callous”.
- Some MPs from within the Kenya Kwanza had also openly opposed the Bill saying they had been instructed by their voters to vote against it.
Image: PCS
Kenya Kwanza on Tuesday backed down on far-reaching taxation measures including 16 per cent VAT on bread, following a public uproar.
On Tuesday, a spirited mobilisation by Kenyans brought Nairobi CBD to a standstill as police engaged protestors in running battles.
There were fears that the protests would snowball into full-blown demonstrations across the country that would hurt the economy as the Azimio demos did.
Concerns that the proposed tax measures would also hurt President William Ruto's popularity forced the government to climb down as it moved to dispel public anger.
At the centre of the move by the government-led side to give in to pressure was a looming standoff in Parliament pitting Kenya Kwanza troops against Azimio.
Critically, the Azimio coalition on Tuesday also called for its PG within Parliament Buildings to whip MPs to shoot down the Finance Bill 2024.
National Assembly Minority Leader Opiyo Wandayi on Monday invited the coalition MPs for the Tuesday meeting, signalling a build-up of a major confrontation on the floor of the House.
"Good afternoon Hon Members of the National Assembly. Upon consultations, we have scheduled a PG meeting in the mini-chamber at county hall on Tuesday, June 18, 2024, at 5 pm. The meeting shall deliberate on the Finance Bill and chart the strategic way forward. Let's endeavour to acquaint ourselves with the Bill before that time. Physical attendance is mandatory,'' reads an invite by Wandayi.
The Raila Odinga has not called for protests over the Bill but there are fears that given the level of organisation on Tuesday, a rallying call by the opposition would worsen the situation for the government.
Raila had last week called for a radical surgery on the Finance Bill, 2024 saying most of the tax proposals “are as insensitive as they are callous”.
“The Finance Bill 2024 fails the taxation dictums of predictability, simplicity, transparency, equality and administrative ease and fairness,” he said.
“It is worse than the one of 2023, an investment killer and a huge milestone around the necks of millions of poor Kenyans who had hoped that the tears they shed over taxes last year would see the government lessen the tax burden in 2024,” Raila added.
While President Ruto had previously vowed to proceed with his path to raise more money through local revenues, some of the proposed taxes in the Finance Bill, 2024 had triggered an outcry.
There were proposals from the informal and formal sector including business people who opposed the Bill as killing local economy.
Some MPs from within the Kenya Kwanza had also openly opposed the Bill saying they had been instructed by their voters to vote against it.
Deputy President Rigathi Gachagua's alleged mutiny within had also posed a threat to the Bill after it emerged that he had retreated to his Mount Kenya stronghold to mobilise his people.
The combined opposition by Azimio and a section of Kenya Kwanza MPs had threatened to stall the passage of the crucial bill that stipulates revenue-raising measures for the government.
The Bill must be passed and enacted into law before the government is allowed to impose any tax measures to raise revenue.
The Finance Bill, 2024 must also be passed before July 1, the beginning of the 2024/25 budget cycle.
Without the Bill's approval, the government would be thrown into a financial crisis without any budget.
However, in what was seen as a delicate balancing act amid a fallout in Kenya Kwanza, the government dropped some of the proposed revenue-raising measures to assuage Kenyans.
"We through the committee have listened to you,'' National Assembly Majority Leader Kimani Ichungw'ah said.
The Bill will come up for the Second Reading on Wednesday and Thursday ahead of voting probably next week.
"We will allow the weekend for any amendments to the Bill,'' Ichungw'ah added.
Addressing Kenyans after a long meeting at State House chaired by the President, Molo MP Kimani Kuria announced that some of the proposals had been dropped.
The contentious tax proposals dropped from the Finance Bill, 2024 include 16% VAT on bread, Excise duty on vegetable oil, VAT on transportation of sugar, 2.5 per cent Motor Vehicle Tax and Eco Levy on locally manufactured products.
The eTims was receded from farmers and small businesses with a turnover of below Sh1 million while Excise duty was imposed on imported table eggs, onions and potatoes to protect local farmers.
The government also dropped an increase in mobile money transfer and VAT on financial services and foreign exchange transactions.
The threshold for VAT registration has been increased from Sh5 million to Sh8 million.
This therefore means that many small businesses will no longer need to register for VAT