Parliament sets Tuesday for tax cut Bill debate

The National Assembly has dropped plans to hold virtual sittings while debating the Bill containing tax cuts announced by President Uhuru Kenyatta last month. Instead, it will hold a session in the House next Tuesday.

National Assembly leader of majority Aden Duale and minority leader John Mbadi yesterday said 70 of the 349 MPs will debate the Bill on April 13.

Parliament had earlier indicated plans to debate the Bill remotely after fears over the possible spread of Coronavirus led to cancellation of yesterday’s sessions — which had been summoned to debate the tax incentives announced March 25 to protect Kenya’s economy against shocks caused by the infectious virus’ effect on the global economy.

Mr Duale and Mr Mbadi said MPs will speed up the parliamentary stages needed to change the law and have the President’s economic stimulus package implemented this month.

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

on the global economy. Mr Duale and Mr Mbadi said MPs will speed up the parliamentary stages needed to change the law and have the President’s economic stimulus package implemented this month.

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

MPs will also debate whether to approve or reverse the cut in VAT to from 16 to 14 percent, which was effected on April 1, leading to a slight drop in the cost of some goods and services.

“We are meeting from next week on Tuesday to consider the President’s interventions. It’s important that the House considers the measures so that Kenyans feel the benefit,” Mr Duale said in a phone interview yesterday.

The tax changes are geared at lowering the cost of basic goods while providing workers with additional income for spending to boost consumption. It will also ease companies’ and small businesses’ cash flow on the lower corporate and turnover taxes.

“We expect the House to consider all the stages of the Bill on Tuesday. We are in a difficult situation where we have to employ extraordinary measures to ensure that Covid-19 does not decimate our economy,” said Mr Mbadi. “If we don’t cause the legislature framework as required it will mean that the status quo shall continue to apply”.

As such, only 70 MPs will be allowed in the debating chamber on the first-to-register basis in line with the social distancing rule to check the spread of virus that has infected 179 people in Kenya.

Speaker Justin Muturi had earlier said the House would 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, clouding implementation of the tax cuts considering the ban on large gatherings.

The Law Society of Kenya has said that the Bill requires wide public participation because it has far-reaching implications, including additional tax on goods like fuel, bread, milk and gas. “We shall not hesitate to challenge this Bill before a constitutional court if it is passed in the current form,” Nelson Havi, the president of the Law Society of Kenya (LSK) said in a petition to Parliament.

Parliament yesterday asked the public to send their views on the proposed law via e-email to the National Assembly.

Already, Treasury Secretary Ukur Yatani has taken advantage of a clause in the tax laws that allows him to vary VAT by margins not exceeding 25 percent. He invoked the clause to implement the lower taxes which kicked in on April 1. The House can either approve or reject the order. Should it reject it, this will reverse VAT to 16 percent on the back of the Statutory Instruments Act of 2013.

“The order shall cease to have effect if a resolution of the National Assembly disapproving the order is passed within 20 days of the day on which the National Assembly next sits after the order is laid, but without prejudice to anything previously done thereunder,” the Act says.

Corporation tax will be reduced to 25 from 30 percent under plans scheduled to come into force this month once approved by Parliament. Workers earning less than Sh24, 000 will be excluded from paying taxes while the minimum income tax rate, known as Pay-As-You-Earn (PAYE) has been reduced from 30 to 25 percent. Traders operating small and mid-sized businesses will paying one percent turnover tax on their sales, down from the three percent rate introduced in January.