The Law Society of Kenya (LSK) has informed members of the National Assembly Finance and Planning Committee that the Finance Bill 2024 will significantly burden low-income households, who constitute the majority of Kenya’s taxpayers.
During presentations before the Kuria Kimani-led committee, LSK President Faith Odhiambo and Vice President Mwaura Kabata cautioned that the bill introduces additional taxes on 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 proposed taxes in the Finance Bill 2024 will also apply to telephone and internet data services, fees for money transfer services by banks and money transfer agencies, and fees for money transfer services by cellular phone service providers and payment service providers licensed under the National Payment System Act, 2011.
The LSK informed MPs that, given the crucial roles of internet data, telephone services, and mobile money transfers in business operations, this amendment is expected to increase the overall cost of doing business in Kenya.
The lawyers’ body highlighted that small business enterprises, which heavily rely 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.
