Eyes On Treasury Tax Proposals As Cost Pressures Mount

 

By Kepha Muiruri For Citizen Digital

Tax proposals by the National Treasury are expected to form one of the key pillars of the

2022 Budget Statement, to be presented Thursday afternoon.

This is as the majority of Kenyans look forward to fiscal pronouncement to ease current cost pressures which have been primarily mirrored in the pricing of fuel and food commodities.

According to tax analysts at PKF, the exchequer should make considerations to manage energy costs including the reduction of applicable taxes and levies on petroleum products and renewable energy solutions.

While the Treasury is expected to still target some sectors for new taxes, PKF Partner Michael Mburugu says the government should aim for equality in taxation.

“We’ve seen some sectors such as finance and insurance continue to make super-normal profits despite shocks resulting from the COVID-19 pandemic. I would expect to see some equality in taxation of Mwananchi to cushion the have nots,” he said.

“This time, the government must look into costs of key commodities such as food. The most important move the government can make at this time is ensuring the cost of basic food items comes down.”

The PKF analysts are further hoping to see special relief on fertilizer imports and local sales alongside the reduction of taxes on the importation of foodstuffs.

At Ernst and Young (EY) tax analysts are rather pessimistic and expect no significant shift in tax proposals from yesteryears.

Francis Kamau, a Tax Partner at EY covering Eastern Africa laments the continued absence of a national tax policy which has seen the government miss the mark in its proposal of new taxation measures.

“I hate to disappoint you. What you would expect is what has been going on. The usual culprits will be the big corporations, you can also expect them to touch a beer here and a cigarette there which has been the general trend,” he said.

“Advance tax, minimum tax, presumptive tax and turnover tax have been non-starters towards addressing taxation of the informal sector.”

The government was barred from implementing the minimum tax after the courts deemed it unconstitutional while the digital services tax provisions were amended to only target non-residents just one year into its implementation.

Even as the Treasury is tasked with striking a delicate balance, the exchequer will be under pressure to raise more revenues in funding the Ksh.3.3 trillion budget estimates.

According to projections from the 2022 Budget Policy Statement (BPS), total revenue is expected to top Ksh.2.43 trillion in the financial year commencing July 1.

This includes Ksh.2.14 trillion as ordinary revenues or taxes.