The Kenya Bankers Association’s (KBA) quest to suspend the "Robin Hood" tax on transactions worth Sh500,000 and above is premature as Parliament has not passed the relevant Bill into law, the attorney-general has said.
The AG took the position in response to KBA’s opposition to the tax on grounds that there was no stakeholder engagement ahead of enactment of the law as provided for in the Constitution.
The AG and the Kenya Revenue Authority (KRA) in separate responses to the bankers’ suit argue that Parliament has already invited public participation on the Finance Bill, 2018, affording bankers an opportunity to present their views to the House.
“The Finance Bill, 2018 is yet to be enacted by Parliament since the public was invited vide a newspaper advertisement on July 6, 2018 and it is therefore premature for the petitioner to allege that there was no public participation before enactment of the Finance Bill, 2018,” says the AG in court papers.
KBA last week filed a suit seeking to suspend the levying of a 0.05 per cent excise duty on transactions above Sh500,000 that took effect on July 1.
The bankers claim the tax is unconstitutional since it was not subjected to public participation and have asked the court to suspend it.
KBA argues that not enough information has been provided to charge the "Robin Hood" tax through banks and other financial institutions. The lobby further argues that the computer software in use is not configured to support the charges.
But KRA has opposed suspension of the tax on grounds that the government will incur huge revenue loss if it is suspended.
The taxman insists that Treasury secretary Henry Rotich’s decision to collect the revenue in the interim pending enactment of the Finance Bill is anchored in law.
KRA has further produced as evidence advertisements by banks in the dailies notifying customers on the tax.
The adverts is evidence enough that banks have understood the concept and have capacity to effect it, contrary to their assertion in court, the taxman has said.
Justice Wilfrida Okwany on July 2 certified KBA’s application as urgent and directed it to be served for mention on July 4.
KBA on July 4 pleaded with the court for interim orders suspending the tax on grounds that banks have difficulties levying the tax, but KRA and the AG opposed the plea. The judge declined to grant the orders and directed KRA and the AG to file their responses in three days.
KBA’s case is now scheduled for hearing on July 16.
Mr Rotich introduced the excise duty on June 14 in his budget statement for the 2018/2019 financial year. The tax is chargeable on Sh500,000 or more transferred through banks or other financial situations.
Mr Rotich also announced an increase in mobile money transfer levies to 12 per cent from 10 per cent. He said proceeds of the new taxes would go towards financing the universal healthcare plan.