The Finance Bill, 2024 – Balancing Taxation and Economic Realities

The Finance Bill, 2024 – Balancing Taxation and Economic Realities

By Euphemia Achieng

The recently introduced Finance Bill, 2024 has sparked discussions across Kenya. While the government aims to enhance revenue collection, concerns have been raised regarding the potential impact of the proposed tax changes on taxpayers and businesses.

Tax Burden

The Finance Bill introduces new taxes and increases existing ones. While this may be necessary for revenue growth, it is important to proceed with caution considering the burden it places on taxpayers. Some points to consider include:

Motor Vehicle Ownership Tax: The 2.5% tax on the value of vehicles adds to the cost of owning a car. For ordinary citizens, this feels like a constant annoyance. Can we strike a balance between revenue needs and affordability?

Affordable Housing Levy: Employees face a 1.5% levy on their gross emoluments. While housing development is important, this levy affects purchasing power. Can we explore alternative funding mechanisms?

New Tax Bands: Rates of 32.5% and 35% may strain middle-income earners. We need to ensure fairness without hindering economic growth.

Compliance Challenges

Frequent changes in tax policy create uncertainty for businesses. Requiring e-TIMs as a condition for expense deductibility adds complexity. At the same time, the removal of penalty and interest waivers increases compliance risks. 

Economic Growth vs. Tax Collection

While the drive to increase tax revenue is understandable, we need to assess the methods. Overburdening existing taxpayers and businesses is not sustainable. Instead, let's focus on improving compliance and fostering economic growth.

The Finance Bill, 2024 requires a delicate balancing act. Let's prioritize fairness, transparency, and sustainable growth. Our economy thrives when taxpayers and businesses flourish.