State House Tensions: Key Changes Announced in Finance Bill 2024

Amid visible tensions between President William Ruto and Deputy President Rigathi Gachagua at State House Nairobi, Finance and Planning Committee Chair Kimani Kuria announced significant amendments to the Finance Bill 2024. Kuria assured Kenyans that their concerns had been heard and addressed, urging restraint in light of the updated proposals.

Key changes to the Finance Bill 2024 include:

1. Bread VAT Dropped: The proposed 16% Value Added Tax (VAT) on bread has been scrapped, offering relief to consumers.

2. Mobile and Bank Transfers: Increases in taxation on mobile phone transfers have been dropped. Additionally, no new taxes will be imposed on bank transfers.

3. Eco Levy Exemptions: All locally manufactured items, including diapers and sanitary pads, will not be subjected to the Eco Levy, supporting local manufacturers.

4. Turnover Tax Adjustments: The VAT threshold for the turnover tax has been increased from 5 million to 8 million Kenyan Shillings. Small and medium enterprises (SMEs) with turnovers below 8 million will not need to register for VAT.

5. eTIMS Exemptions: Businesses with a turnover below 1 million, including small-scale avocado farmers, will be exempt from eTIMS registration requirements.

6. Local Farmers Protection: Excise duty will be applied only to imported table eggs, onions, and potatoes, protecting local farmers.

7. Alcohol Taxation: A shift from volume-based to alcohol content-based taxation has been proposed. Alcohol producers with high alcohol content products will face higher duties.

8. Pension Tax Relief: The tax-exempt amount for pension contributions will be increased from 20,000 to 30,000 Kenyan Shillings per month.

9. JSS Teachers: All 46,000 Junior Secondary School (JSS) teachers will be hired on permanent and pensionable terms. An additional 20,000 teachers will be recruited.

10. Motor Vehicle Tax Dropped: The proposed motor vehicle tax has been removed.

11. Sugarcane Farmer: The VAT on transporting sugarcane from farms to milling factories has been eliminated, benefiting sugarcane farmers.

These changes reflect the government's response to widespread public concern over the original proposals in the Finance Bill 2024. Kuria's announcement aims to alleviate some of the financial pressures on Kenyan citizens and businesses, while maintaining fiscal responsibility. The revised bill is now set to be tabled for further debate and approval.