List of Taxes President Ruto Introduced in 2023
Throughout most of 2023, individuals in Kenya, regardless of their political affiliations, joined together in expressing sorrow about the ongoing rise in the expenses of daily life.
As per the consensus, there’s a persistent decline in available job opportunities in the market, making job security increasingly uncommon. Consequently, some people are compelled to start their ventures to sustain themselves financially.
A primary issue at the forefront of discussions about the cost of living revolves around Ruto’s inclination to implement an unprecedented amount of taxes, substantially reducing earnings.
Here is a list of the taxes that were either introduced or significantly increased.
Housing Levy
Starting from July 1, the government struggled to explain the necessity of imposing a compulsory 1.5 percent levy on the salaries of all employed Kenyans for the Affordable Housing project.
The fee, which employers were required to match, contributed to the National Housing Development Fund (NHDF).
The Finance Act of 2023 specified that the fund would construct economical housing accommodations intended for low-earning Kenyan citizens, particularly focusing on individuals residing in urban regions.
The imposed tax, implemented at the start of the 2023/2024 Financial Year, has faced legal challenges, notably a recent High Court decision deeming it unlawful.
The Court, responding to a legal case brought by Busia Senator Okiya Omtatah, deemed the deduction illegal. Subsequently, the State hurriedly appealed the decision to the Court of Appeal.
Social Fund Levy
The leader in charge of the country also aimed to revamp the National Hospital Insurance Fund (NHIF) by proposing three new laws: The Social Health Insurance Act, the Primary Health Care Act, and the Digital Health Act.
The passed Acts were designed to support the government in realizing Universal Health Coverage as part of the Head of State’s overarching plan for legacy.
The objective of the Social Health Insurance Act is to divide the National Health Insurance Fund (NHIF) into three separate funds: the Primary Health Care Fund, the Social Health Insurance Fund, and the Chronic Illness and Emergency Fund.
The proposal suggests implementing a 1.5 percent charge on employed individuals’ salaries while decreasing contributions from unemployed Kenyans to Ksh300.
The Kenya Medical Practitioners, Pharmacists & Dentists Union (KMPDU) took legal action and requested the suspension of the Acts, stating that they have adverse impacts on the broader health sector.
The Court has subsequently released directives to pause the enforcement of the Acts until February 2024.
Export and Investment Promotion Levy
President William Ruto suggested raising the Export and Investment Promotion Levy (EIPL) on all imported items as a means to encourage domestic manufacturing.
The tax exemption applies solely to products originating from nations within the East African Community.
The EIPL will apply at a 10 percent rate based on the customs value of the goods brought into the country.
The EIPL anticipates producing Ksh 10 billion in income intended for supporting both the National Housing Development Fund (NHDF) and the Kenya Industrial Transformation Plan (KITP).
Nevertheless, the Kenya Association of Manufacturers (KMA) opposed the suggested modification and the implementation of the Export and Investment Promotion Levy, asserting that it would increase the expenses associated with producing Kenyan-manufactured goods.
Expanded PAYE for those earning Ksh800,000 and above
The 2023 Finance Act broadened the scope of Pay As You Earn (PAYE) to encompass individuals earning Ksh 800,000 and beyond, requiring them to pay a 35 percent rate under PAYE.
This implies that individuals in Kenya making Ksh800,000 or more will now be subject to paying PAYE on their complete earnings, marking a rise from the prior 30 percent rate.
The original growth plan was based on monthly earnings beginning at Ksh500,000, but Members of Parliament revised it to Ksh800,000, effectively exempting themselves from the higher PAYE range.
Increase in Turnover Tax
President William Ruto created a stir by implementing the Turnover Tax (TOT) in Kenya, which applies a 3 percent rate to all businesses, regardless of whether they are profitable or not.
At first, the fee was imposed at a 1 percent rate, impacting businesses earning a turnover of Ksh1 million or higher.
16 Percent VAT on Petroleum Products
The 2023 Finance Act increased the Value Added Tax (VAT) on petroleum products from 8 to 16 percent, much to the dismay of consumers.
The rise resulted in Kenyans having to shell out extra money for fuel, causing a ripple effect on transportation, food prices, and various other goods and services.
The prices of petrol, diesel, and kerosene all surpassed the Ksh200 per liter threshold.
The government put forward the notion that raising the VAT would generate more income, which in turn would be allocated to funding development initiatives. This shift aims to reduce dependence on foreign loans.
List of Taxes President Ruto Introduced in 2023
