Proposed amendment to cushion Kenyans against Income Tax lost

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Parliamentary Budget Committee chairman Mutava Musyimi (left) and Cabinet Secretary for Treasury Henry Rotich during the launch of the Sector Working Groups (SWGs) for the financial year 2014/15-2016/17 MTEF budget at the Kenyatta International Conference Centre, Nairobi September 16, 2013. The Budget committee has rejected a proposed amendment to the Income Tax Act that would have cushioned millions of Kenyans from the tax bracket September 25, 2013. SALATON NJAU 

In Summary

• Budget Committee rejects amendment to the Pay As You Earn tax structure on grounds that it would negatively affect income tax collections.
• Suba MP John Mbadi had proposed income tax exemption on Kenyans earning less than Sh38,892 a month.

By CAROLINE WAFULA
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A proposed amendment to the Income Tax Act that would have cushioned millions of Kenyans from the tax bracket was lost on the floor of Parliament.

The Budget and Appropriations Committee rejected and advised the National Assembly against the amendment to the Pay As You Earn tax structure on grounds that it would negatively affect income tax collections.

Committee chairman Mutava Musyimi said his team requires more time to consult.

The House thus proceeded to approve the Finance Bill leaving out the amendments that had been proposed by Suba MP John Mbadi.

Mr Mbadi had proposed income tax exemption on Kenyans earning less than Sh38,892 a month.

The committee declined to adopt an amendment by the MP that would have impacted on the Capital Markets also citing need for further consultations.

Members scrutinised clause by clause the Bill containing amendments to laws relating to various taxes and duties that have a bearing on the country’s revenue policy and administration.

Also included in the Bill are amendments to the Prevention of Terrorism Act 2012 that criminalises collection of funds to support terrorism.

HURT KENYA'S EXPORTS

It repeals Section 5 of the Act and replaces it with a new Section that states that anyone who directly or indirectly collects or provides or makes available any property, funds or services to be used for commission or facilitation of terrorist acts commits an offence and is liable upon conviction to imprisonment for a term not exceeding 20 years.

The Budget Committee declined an amendment proposed by Rangwe MP George Ogallo, who had proposed to place a 1.5 per cent Railway Development Levy on exports. The committee said this would hurt Kenya’s key export products such as tea, coffee and horticulture.

The Bill that was submitted to Parliament by the Cabinet Secretary, National Treasury formulates the proposals announced in the 2013/2014 budget relating to liability, collection of taxes and related matters.

The National Assembly concluded debate on the amendments Wednesday.