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Economy

MPs to speed up debate on tax breaks

Speaker Justin Muturi has said the National
Speaker Justin Muturi has said the National Assembly will speed up the parliamentary stages needed to effect changes to the law. FILE PHOTO | NMG 

Speaker Justin Muturi has said the National Assembly will speed up the parliamentary stages needed to effect changes to the law that will translate the President's economic stimulus package into a reality.

Initially, the need for public participation had clouded the proposed implementation of tax incentives announced by President Uhuru Kenyatta on Wednesday to protect Kenya’s economy against shocks caused by the coronavirus pandemic.

Some of the tax cuts, including corporation, personal income and sales levy for small and mid-sized traders, require changes to the law, which must be preceded by public participation.

Thursday, Mr Muturi said the House will rely on the media in the push to make debate on the tax cuts consistent with public participation rules and regulations.

Article 118 of the Constitution demands that the public be involved in the process of changing laws, including holding public sittings, a stage that might delay implementation of the tax cuts considering the ban on large gatherings.

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On Wednesday, Mr Kenyatta exempted those earning below Sh24,000 for income tax and lowered corporation tax to 25 from 30 percent. He also reduced the maximum personal income tax rate to 25 percent from the current 30 percent.

“I am consciously aware that the requirement in the Constitution, national values and principals of governance in Article 10 talk about public participation,” Mr Muturi said. “Given the circumstances that we are in, we will obviously require that certain process be fast-tracked in order to ensure that the benefits that His Excellency the President hoped to trickle down to the common Mwananchi are realised sooner rather than later.”

Already, Treasury Secretary Ukur Yatani has taken advantage of a clause in the tax laws that allows him to vary Value-Added Tax (VAT) by margins not exceeding 25 percent. Mr Kenyatta proposed a reduction on VAT rate from 16 to 14 percent, seeking to lower the cost of a variety of basic items like cooking gas and home supplies.

Yesterday, Mr Yatani said the revised VAT rates will apply from April 1. He anchored his decision in sections of the VAT Act which states: “The Cabinet Secretary may, by order published in the Gazette, amend the rate of tax by increasing or decreasing any of the rates of tax by an amount not exceeding twenty-five percent of the rate specified in section 5(2)(b).”

Lawyers interviewed by the Business Daily argued that the public participation law can be overlooked when legal changes seek to ease Kenyans’ pain.

“My own view is that the requirement of public participation is critical when increasing taxes, not decreasing,” said Muthomi Thiankolu, a law lecturer at the University of Nairobi.

Kenya had confirmed 31 cases of Covid-19 by Thursday.

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