MP seeks changes in Bill to exempt lowly paid workers from tax

Suba MP John Mbadi. FILE 

By EDWIN MUTAI

An MP has proposed amendments to the Finance Bill that could see people earning less than Sh38,982 per month exempted from income tax.

Those earning more than this would pay income tax at the rate of 30 per cent, including
capital gains tax on the sale of property and securities.

“The eighth schedule of the Income Tax Act be amended to include profit realised from the sale of securities like shares, stocks, bonds, precious metals, gains from sale of land, gains from sale of buildings as chargeable at the rate of 30 per cent under the Income Tax Act,” the amendments by Suba MP John Mbadi read.

If MPs agree with Mr Mbadi’s amendments to the Finance Bill, 2013, married working women who earn Sh466,704 per year will, however, be subjected to 10 per cent (Sh388) taxation on the first Sh38,892.

The National Assembly is scheduled to process the Finance Bill, 2013 through the Committee of the Whole House on Wednesday.

The Suba MP also seeks to abolish provision in the Income Tax Act for personal relief and insurance relief which currently stands at Sh13,944 and 15 per cent of the amount of premiums paid not exceed Sh60,000 respectively.

The Finance Bill is a legal document that allows the government to collect tax as outlined in the budget for a particular financial year.

MPs started debate on the Bill last week and concluded the same on Tuesday. A number of them have promised to sponsor amendments to the Bill with the aim of relieving Kenyans from the heavy burden of taxation, especially in the wake of sharp rise in commodity prices arising from the enforcement of the Value Added Tax (VAT) Act.

“Individual rate of tax shall be on the first Sh466,704 be zero and on all income over Sh466,704 be 30 per cent,” reads part of Mr Mbadi’s amendment to the Third Schedules of the Income Tax Act.

“The wife’s employment, wife’s professional and wife’s self-employment income rates of tax shall be: on the first Sh466,704, 30 per cent and on all income over Sh466,704 be 30 per cent,” the amendments adds.

Currently, the individual rates of tax are 10 per cent on the first Sh121,968, 11 per cent on the next Sh114,912, 15 per cent on the next Sh114,912, 20 per cent on the next Sh114,912, 25 per cent on the next Sh114,912 and 30 per cent on all income over Sh466,704.

Kenyans who earn less than Sh15,000 per month are not subjected to tax and the passage of Mr Mbadi’s amendments could be a big relief to many households.

Finance Trade and Planning Committee chairman Benjamin Lang’at said that his team would propose a number of amendments to the Bill following concerns raised by MPs and the public.