List of New Taxes set to Finance Treasury’s Ksh 2.7 Trillion Budget

Budget 2020/2021

Treasury CS Ukur Yataini will be today be presenting his maiden Ksh 2.7 trillion budget for the year 2020/2021 in the National Assembly. Due to COVID-19 pandemic, this much-awaited event will be lowkey attended by just a handful of relevant leaders. Ukur Yatani’s fiscal consolidation plan has to offset government expenditure from the exchequer, had to be revised downward due to the constraints being presented by the virus, floods and locust invasion.

Speaking during an interview with Citizen TV on Tuesday, CS Yatani mentioned that the government has been affected greatly by the pandemic having to forgo taxes that were crucial to the budget-making process.

“We have reduced VAT, income tax and in the process, we have forgone Ksh. 172billion, these are funds that would have ordinarily be used in the budget,” he said.

For a common mwananchi, there will be little to smile about as the treasure has reintroduced a raft of changes in the tax regime that will directly affect Kenyans. While the treasury notes that the slash on VAT, Income Tax and Turnover Tax to cushion Kenyans from the COVID-19 a pandemic was necessary, KRA will fall short of its target by millions of shillings as businesses have been affected by the virus. This new tax measures will be a revenue stream for the taxman to be able to meet the set target.

Here is a number of tax measures that have been reintroduced to finance the Ksh 2.7 Trillion Budget.

1.Reintroduction of VAT on liquefied petroleum gas (LPG)

While Kenyans have been slowly graduating to clean energy,  they might have to go back to their old ways as the 14%VAT has been reintroduced for Liquified Petroleum gas. According to audit firm KPMG, the proposed VAT charge on LPG will definitely increase the price of cooking gas, which contradicts government efforts to shift consumers from the use of wood fuel to LPG to conserve our forests.

2.Digital Marketplace taxes

The ministry has already drafted regulations termed as the Value Added Tax (Digital Marketplace Supply) Regulations, 2020 targeted at the digital economy. Digital businesses targeted in these new regulations include subscription-based media outlets like news magazines, television shows, music and podcasts, sale of electronic event tickets, software programs, web hosting services, transport hailing platforms among others.

“The regulations relate to any supply of a service made over a platform that enables the direct interaction between buyers and sellers of services through electronic means,” read part of the regulations.

3. Excise duty on alcohol

Kenya being a drinking nation. The National Treasury has increased the excise duty on spirits to contribute to its revenue basket.

4. Retirement tax

For the longest time, the National Social Security Fund has been tax-free. But retirees will soon be paying taxes to the economy even in their sunset days.

5. National Road Tolls

The government is looking to collect revenue from motorists using main roads that it has spent billions in constructing. This toll will target all types of road users as more Kenyans are switching to private means of transport.

Previous articleLittle Know Details About Outgoing Safaricom Finance Boss Sateesh Kamath
Next articleSMEs among Top Beneficiaries of the Economic Stimulus Package in the 2020/21 Budget
Inzillia is an avid reader and researcher on matters finance, business, government affairs, culture, and human interest stories. Poetry too. Email: