Githae announces tax measures to meet pay hikes

October 5, 2012
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Githae has assured Kenyans that there will be no increase of income tax/XINHUA-File
NAIROBI, Kenya, Oct 5 – The Ministry of Finance has announced new tax measures to raise over Sh40 billion needed to meet the recent wage adjustments in the public sector.

This follows amendment of the Finance Bill 2012 by Parliament on Thursday evening which will now see an introduction of a 10 percent excise duty on mobile money transfers and any other fees charged by other financial institutions.

Speaking to journalist on Friday, Finance Minister Njeru Githae however said the duty will be paid by the service providers and will not affect the customers in any way as earlier feared.

“This sector is the fastest growing and so the taxman should also get his bite. I expect this measure to give me close to Sh4.5 billion immediately but I do not expect any increase in airtime or the charges to the customer. This tax is payable by the service providers; not the customer,” said Githae warning that the government will monitor to ensure there is no secret adjustments by the service providers.

The minister is also targeting beer and wines, proposing a 10 percent increment on duty on the retail price.

“As the beer bottle comes out of the production line the revenue stamp is put on the bottles and I am going to put a monitor here in my office and another one at KRA (Kenya Revenue Authority) to see how much money is coming into the kitty. At the moment we rely on the good will of the factories to tell us the quantity of their production and profits,” Githae said.

He has also instructed all public entities to surrender excess surplus immediately after auditing a measure that is expected to raise close to Sh8 billion.

The entities include the Capital Markets Authority, Insurance Regulatory Authority, Communications Commissions of Kenya, Retirement Benefits Authority, Central Bank of Kenya, among others.

The Treasury is also expecting over Sh14 billion in reimbursements from donors following the multi lateral operations in Somalia.

Githae is also hoping to raise close to Sh12.5 billion through the rationalisation of recurrent and development expenditures as indicated in the budget.

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