Africa-Press – Kenya. The Finance Committee of the National Assembly has revealed plans to review taxes charged on various commodities in efforts to bring down the high cost of living.
Molo MP Francis Kimani Kuria, the newly elected chairman of the committee, said the review would be the committee’s first priority.
“In lieu of the high cost of living, we are looking, in consultation with our leaders, what are these taxes that are leading to the increase in the cost of living,” he told the Star on Wednesday.
Kimani, an ally President William Ruto, said the committee would do a breakdown of the particular taxes and “see what is it that increases the cost by how much and at what rate.”
The Star has established that the fuel taxes, excise duty on heavily consumed goods, and levies believed to be counterproductive would be considered in the review.
“This will help us make decision on what steps we need to take to bring down the cost of living,” the lawmaker said.
Presently, motorists are charged eight per cent tax on fuel products.
The Kenya Revenue Authority also recently increased excise duty on various basic commodities, worsening the cost of the living crisis.
Kimani said the steps stem from the observation that increment of taxes has ended up reducing the amounts collected from the said tax heads.
“The laffer curve (an economics theory) says that when you increase the rate of tax beyond a particular rate, you don’t collect more, you collect less.”
“That is where we are in many sectors,” Kimani said, adding that his team would change the ‘wrong notion that for you to collect more taxes, you have to increase the tax rate.”
“This never works. Because when you increase tax rates to a particular level – beyond the laffer curve, you collect less. That is what we are looking at,” he added.
The committee is set to hold meetings with stakeholders, including manufactures to actualize the plan.
“Some of the manufacturers say they want to pay more taxes and they know how they can raise more. We realized that we have not been listening to them,” he said.
“This is an engagement we are going to have with stakeholders to ensure that the taxes we levy will not chase away investors but make the country attractive.”
The lawmaker added that the review would be in line with Ruto’s promise to ease the burden staged by the high prices, which have been attributed to taxation.
On this, Kimani said, “We will deliver the promises in the Kenya Kwanza manifesto where we said we are going to bring down the cost of living and make it easier to do business.”
“After that analysis, we are going to that work properly and procedurally. We will reintroduce a tax amendment bill to ensure the laws that are passed stand the test of integrity, public good.”
“We are going to bake more cake in terms of revenue collection. This is going to be our first priority,” the MP explained, adding that they would also review tax measures which the courts have annulled.
Kimani stated that the committee would reconsider some of the legislative proposals with a view to regularizing them.
“Part of the reasons Kenyans have taken us to court is on how the bills were done, some were hurried therefore lacked public participation, and others declared unconstitutional.”
Ruto’s administration has pledged to reduce the cost of living within a year, citing the cash flow crisis in the country as having slowed their earlier plan to address the issues in 100 days.
A team of experts advising parliament on matters economics have observed that tough times await Kenyans owing to the ravaging drought and the external factors affecting trade.
“It is noted that drought mitigation, fertilizer subsidy and stocking up food reserves were not adequately prioritized in the 2022/2023 budget,” the Parliamentary Budget Office said.
For More News And Analysis About Kenya Follow Africa-Press
