Increasing cases of COVID-19 saw the government announce a couple of measures to help the economy and Kenyans survive the crisis. So far the government has intervened through reduced tax, voluntary pay cuts and channelling some money from the Treasury into COVID-19 fight.
Tax reliefs on earnings a will deny the exchequer billions, but the bigger revenue loss will stream from the slashed VAT levy that could leave a big hole in the government revenue basket. To balance the other side of the equation, the government is imposing new levies on fuel, the sale of homes and land for small-scale property owners in proposed revenue changes.
The Tax Laws (Amendment) Bill has scrapped off exemptions granted to individuals selling their own homes. Together with those selling land valued at less than Ksh 3 million in urban centres and farmland of below 50 acres outside towns they will start paying the five per cent capital gain tax which will definitely affect investments in property. The capital gain tax was reintroduced in 2014, to help the government raise funds for development projects.
The Bill yet to be tabled before parliament is also proposing anew tax on petroleum products, that will affect the duty on petrol and diesel upwards. Duties and other levies in the calculation of value-added tax (VAT) included as well are set to boost the state coffers back to normal with billions. Experts say the inclusion of excise duty and other charges in the computation of the VAT on fuel will significantly increase the VAT cost of fuel