Drastic implications posed by the Value Added Tax (VAT) Bill 2013 have taken shape ahead of debate and possible sailing through in Parliament tomorrow. Privileged groups who had been exempt from tax or were enjoying high tax subsidies will now pay in full “what is Caesar’s” if the Bill is passed. Those who could be most drastically affected are Kenya Defence Forces (KDF) and any other Security agents who enjoy salaries and goods heavily exempted from taxation. Most affected could be the Defence Forces Canteen Organisation (DFCO), formerly AFCO, that affords KDF personnel highly subsidised goods. Also targeted by new taxation would be the disabled and physically handicapped who have been enjoying VAT relief. The President, who has been enjoying relief, is also targeted by the VAT Bill. The VAT Bill which proposes a 16 percent tax on the essential commodities will also expose Kenyans to hard times ahead, once the prices of essential commodities which had been zero-rated are hit by the taxation. The Bill has already been slotted into tomorrow’s Order Paper and is scheduled to go through First Reading in the afternoon to pave way for its debate and subsequent passing anytime this week. According to the government, taxing the basic commodities would afford the taxman Sh10 billion more, monthly. If passed into law, the President, KDF and all other security officers and the disabled and physically handicapped persons, who previously enjoyed a zero rated status, will now be subjected to taxation. Zero rate Reads the Bill: “The following persons lose their zero rate status and will be required to pay VAT: The President, Kenya Defence Forces /or any other service, disabled and physically handicapped persons.” Already, plans to introduce the Bill have elicited sharp reaction from the Consumers Federation of Kenya (COFEK) and who have threatened to hold demonstrations outside Parliament tomorrow to appeal to MPs to shoot it down. Cofek secretary general Stephen Mutoro termed the Bill unfriendly, noting it negates the spirit of the constitution as the public was not involved. More MPs from both sides are said to be against the Bill as it could portray them in bad light among the public. Mutoro said: “We will lead a major demonstration on Tuesday outside Parliament to pressure MPs not to pass that Bill. We hope they will shelve their partisan approach and not pass it as it mostly hurts the poor.” The government resolved to re-introduce the Bill for the third time in order to raise its huge deficit which stands at Sh250 billion in the 2013/2014 budget. If the MPs pass the Bill Kenyans will pay more for essential basics commodities like sanitary towels, execise books, newspapers, journals and periodicals, rice, wheat flour, bread, wheat, computers and computer software and processed milk, all which previously attracted no VAT. The low-income earners will also not be spared as they would have to pay higher prices for domestic electricity consumption, water drilling services and landing and parking services for aircraft which are currently not being taxed. In addition, health contractions, vitamins and hormones glands and body organs, hospital and consumable human medicines and spectacles, some types of medical and laboratory equipment, including medical aids for pace-makers, ambulance, fire fighting vehicle, wheelchairs, fishing nets mosquito nets, insecticides and herbicides, fungicides including mosquito coils and chips, will also be subjected to tax. Also to be subjected to tax are dairy products, most types of seeds, non-roasted coffees, roasted flowers, photographic films, buses assembled and unassembled aircraft parts and accessories, including special equipment for repair and maintenance of aircraft, ships and vessels of all kinds and sizes, including parts and accessories Should the proposed Bill become law in the current condition, manufacturers of commodities will have to increase costs to recover money paid to the taxman. According to the taxman, under the current taxation regime, up to Sh11 billion is lost and thus have to ensure they seal all loopholes.
Posted on: Tue, 02 Jul 2013 08:14:16 +0000
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