Cost of living set to go up in new tax regime

PHOTO | SALATON NJAU A supermarket attendant arranges consumer goods at a Tuskys Supermarket branch on May 6, 2013. Taxpayers are expected to contribute more in the new tax regime.  NATION MEDIA GROUP

By WACHIRA KANG’ARU wkangaru@ke.nationmedia.com
Posted  Tuesday, May 7  2013 at  23:30

 

Beer drinkers and smokers are expected to pay more as the government seeks to raise Sh986 billion revenue.

The government is banking on a more improved economic growth, with tax from workers and earnings from companies also expected to go up.

The Kenya Revenue Authority will also be expected to bring more people into the tax paying bracket as the country gears up to finance a Sh1.6 trillion budget.

Individual taxpayers are expected to contribute the single largest revenue item with Pay As You Earn expected to hit Sh249 billion, a 20 per cent increase from last year’s level.

The government intends to keep to the traditional sources of taxation to meet the growing budgetary expenditure with beer and cigarettes prices likely to increase as excise duty goes up.

Taxing commodities

“The government knows that taxing commodities like beers and cigarettes will always have a positive impact and increase the amount of taxes. People will always drink and smoke, said Mr Erastus Omollo, a practising accountant at Erastus Omollo and Company Certified Public Accountants.

But standing out is the tax collection from excise duty, which is expected to go up by 26 per cent to hit Sh107 billion against the Sh85 billion expected to be raised by June 30.

Implementation of the 10 per cent excise tax on financial services and mobile money transfers, introduced late last year, will also come in handy.

Income from corporate earnings is also expected to increase by a similar margin, which would imply the government is banking on administrative and economic growth to hit the two targets.

In another twist, the government defended itself from the accusation that it had failed to table the revenue estimates last Tuesday, with National Assembly Majority Leader Aden Duale claiming it was an oversight.

“These documents came with the other documents, but there was just an oversight,” Mr Duale said as he tabled the estimates on Tuesday.

Suba MP John Mbadi had earlier questioned the constitutionality of the budget estimates tabled last week for lack of the revenue estimates. The documents are stamped April 30, 2013.

Misbehaviour

He said that although the submission of the estimates had corrected “constitutional misbehaviour” by the Executive, Mr Duale also ought to have brought expenses for the Consolidated Fund.

Mr Duale retorted that “all documents would be made available to the committees when they start working.”

Last week, the government tabled a budget estimate of Sh1 trillion while setting aside Sh198.7 billion to the county governments.

The allocation to the county governments has since been reviewed to Sh204 billion after Deputy President William Ruto intervened following complaint by the Commission on Revenue Allocation.Parliamentary Service Commission submitted a budgetary estimate of Sh24 billion, Judiciary Sh22 billion, while Sh380 billion was set aside for Consolidated Fund, money that goes to pay pension, paying of public debt and salaries for the constitutional office holders.