Ruto’s tax proposals will reverse economic gains, LSK warns

The Law Society of Kenya has warned that President William Ruto’s proposed tax measures will reverse gains made to achieve national equality.

LSK President Faith Odhiambo said introducing additional tax burdens on lower-income Kenyans, who already struggle with the high cost of living, directly impacts their means of livelihood and quality of life.

“This in itself is an antithesis to the national goals and objectives,” Odhiambo said.

The Finance Bill, 2024, aims to expand the tax base and increase revenue collection from Kenyan citizens through a raft of new tax measures.

Odhiambo said the new proposals appear to reverse or diminish the various exemptions and benefits introduced by the Finance Act, 2023.

“The Bill proposes to increase the excise duty rates applicable to telephone and internet data services, as well as money transfer services, from 15 per cent to 20 per cent. Notably, the Finance Act 2023 had previously reduced the excise duty on telephone and internet data services from 20 per cent to 15 per cent.” 

The LSK boss added that the Bill has proposed removal of various tax reliefs put in place by the Finance Act 2023 in relation to electric vehicles, motorcycles, buses and bicycles.

She said LSK emphasises the necessity of maintaining a stable tax regime in Kenya.

“Such stability is crucial for fostering an environment conducive to business operations and attracting foreign direct investment,” she explained.

Odhiambo regretted that the Bill further introduces various provisions that will increase the cost of living for many Kenyans.

“The various proposals in the Bill will make life more expensive for a significant portion of the population, adding financial strain to already burdened households,” she pointed out.

Additionally, Odhiambo said the Bill proposes to increase excise duty rates from 15 per cent to 20 per cent on fees charged for money transfer services by banks, money transfer agencies and other financial service providers, as well as money transfer services by cellular phone providers.

“Once again, this proposal will have the effect of increasing the cost of living and will push many Kenyans to a cash-based economy,” she said.

Odhiambo further said there are various sections of the Bill that raise concerns regarding the rule of law and its adherence by some entities.

She cited the proposal to exempt KRA from the provisions of the Data Protection Act 2019, where disclosure is necessary to access personal data for assessment, enforcement or collection of taxes.

“In our view, the proposed unlimited access to personal data, without court orders or proper procedures, will infringe upon taxpayers' rights to privacy and poses a risk of data misuse. For this reason, we consider such a move unconstitutional and a violation of the rule of law,” Odhiambo said.