YAOUNDÉ, Cameroon – Kenya’s Catholic bishops are warning if the 2024 Finance Bill is passed, it would hurt the vast majority of the African country’s poor.
The bill aims to broaden the tax base and boost state revenue in in order to curb the budget deficit to 3.3 percent of GDP from 5.7 percent this year.
Specifically, it suggests raising the excise duty rates for telephone and internet data services, as well as money transfer services, from 15 percent to 20 percent, reversing the previous year’s law, which lowered the tax.
The Bill also proposes a 16 percent VAT on bread and on motorcycles.
“The policies and structural reforms outlined in this budget have laid a firm foundation to protect this fragile recovery for a sustained socio-economic transformation,” said Kenya’s finance minister Njuguna Ndung’u as he presented the country’s $31.1 billion budget to parliament.
“Financing development is critical to this economic transformation that is why raising adequate tax revenues is a core pillar for this economic transformation and growth,” he said.
Kenya’s Catholic bishops have in a lengthy statement criticized the slew of taxes even as they recognized the need for the government to raise revenue for public service delivery.
In their June 7 statement, the prelates described the new taxes as “punitive” because they would mostly affect the poorest people of Kenyan society.
“Given the current economic challenges, it is our opinion that the proposed punitive taxes are likely to devastate the economy and impoverish the majority of Kenyans,” the bishops said.
Referring specifically to the tax on motorcycles, the bishops noted that although it could potentially “improve tax collection and road infrastructure, we question which public service this tax will serve, given that the Kenya Roads Board already collects a Road Maintenance Fuel Levy … for road maintenance and development.”
“This new tax will increase operational costs for Small and Micro Enterprises (SMEs), impacting their ability to invest in marketing, staff training, and equipment upgrades,” the bishops said.
They said this will increase the cost of inputs, thereby reducing profits, and SMEs will face higher credit interest rates.
The bishops also expressed worry over the eco-levy contained in the Finance Bill. The said levy aims to promote responsible waste management, but it could end up squeezing household budgets and hindering access to essential technology.
“While the government’s goal to support the digital and creative economy by ensuring widespread access to smartphones is commendable, this levy could hinder these objectives,” the bishops said.
“The Bill may inadvertently undermine efforts to combat climate change, as SMEs and individuals might revert to using older, less fuel-efficient vehicles to avoid higher taxes on newer, fuel-efficient, hybrid, and electric cars,” they said.
While there are valid concerns about the manner in which the government is using taxes to raise revenue, there are even greater concerns about how the money collected is managed.
The bishops in their June 7 statement also raised such worries, urging the government to tackle corruption head-on.
“It is regrettable that despite pleas to our leaders to implement measures to lower the cost of living and reduce suffering, a significant portion of tax revenues ends up in the pockets of a few well-connected individuals,” they said.
“We observe that addressing corruption and halting the wastage of available resources would generate sufficient revenue to support essential services, thereby reducing the burden on Kenyans who are already struggling with a high cost of living,” the bishops said.
The bishops said they can’t accept tax hikes that are clearly against the interests of the poor, because that would go counter to the social teaching of the Church.
“In the spirit of the Social Teaching of the Catholic Church, which emphasizes a preferential option for the poor, we reject any law that adversely affects the poor and impoverished,” they said.
“The government has a responsibility to ensure that the citizens enjoy basic needs by initiating policies that serve the common good of the nation,” the prelates continued.
But it’s not only Catholic Bishops raising concerns about the tax hikes. Politicians, NGOs as well as industry officials are also at odds with the slew of tax cuts. Opposition leader Raila Odinga has described the new taxes as “insensitive and callous.”
“We cannot afford taxation measures whose end result is to inflict more pain on the poor who expect relief,” Odinga said.
The Catholic bishops urged the government to “establish a tax regime that is predictable and conducive to economic growth, rather than one that stifles the private sector and overburdens the poor and vulnerable.”
Source link : https://cruxnow.com/church-in-africa/2024/06/kenya-bishops-say-proposed-tax-increases-would-punish-the-poor/
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Publish date : 2024-06-14 07:06:53
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