NAIROBI, Kenya, Oct 28 – The government will now be able to raise an additional Sh25 billion after Jubilee Coalition MPs passed President Uhuru Kenyatta’s memorandum on Excise Duty which now awaits his assent to become law.
President Kenyatta had earlier this month rejected the lawmakers’ attempt to lower taxes on beer, cigarettes, used cars, juices and water saying it would affect revenue collection to finance the expenditure which has already been budgeted for.
Minority Leader Francis Nyenze and his Deputy Jakoyo Midiwo led their troops in storming out of the House when they realised that there were no numbers to overturn the memorandum.
Only 91 MPs out of the 233 required to overturn Mr Kenyatta’s amendments to the Bill were present in the House.
National Assembly Speaker Justin Muturi on Tuesday deferred debate of the presidential veto to allow MPs time to marshal 233 MPs needed to override it.
Deliberations on the memorandum were put off after the House degenerated into a shouting match forcing Presiding Speaker Moses Cheboi, who chaired the Committee of the Whole House, to adjourn scrutiny of the memorandum.
During the National Budget Presentation, National Treasury Cabinet Secretary Henry Rotich had proposed importers of used vehicles less than three years old to pay to Sh150,000 in Excise Duty. It wants importers of those over three years old from the date of first registration to pay Sh200,000 per unit.
MPs reduced the duty to Sh100,000 and Sh150,000 per unit, respectively.
This adjustment replaces the existing 20 percent tax based on a vehicle’s value, which is charged alongside customs and Value Added Tax.
Both new and second-hand cars are now set to cost more because dealers are expected to transfer the new higher tax totals to buyers.
MPs had given the boda boda business a reprieve after the dropped a Sh10,000 Excise Duty which had been proposed by the National Treasury during the budget. The industry will now have to contend with the tax after Wednesday’s development.
Cigarettes, which are currently taxable at a rate of Sh1,200 per 1,000 sticks (mille) or 35 percent of the retail sales price, will see the applicable rate more than double to Sh2,500 per mille based on the President’s and Rotich’s proposal.
The Bill backed by Parliament had a graduated scale based on cigarettes prices. MPs wanted cigarettes retailing at Sh2,750 for 1,000 sticks charged Sh900 and those between Sh2,751 to Sh3,750 levied duty of Sh1,200 per mile.
Cigarettes selling at between Sh3,751 to Sh4,750 be charged Sh1,800 per mille and Sh2,800 for those that cost more than Sh4,750.
Consumers of bottled water thought they had been spared a rise in cost of the item after Parliament halved the levy of Sh10 per litre imposed under the Excise Bill 2015 to Sh5.
MPs had in August also completely scrapped similar tax on fruit and vegetable juices.