On 3^rd June 2024, KEPSA presented a detailed memorandum to the National Assembly Committee on Finance and National Planning at a public hearing session in Nairobi. The memorandum addressed several critical issues in the Finance Bill 2024, with a focus on proposals aimed at economic stability and growth.

One of the primary concerns raised by KEPSA was the Motor Vehicle Tax. They proposed exempting commercial and agricultural vehicles from this tax. Additionally, KEPSA suggested removing the tax from the Income Tax Act and instead introducing it as a levy under the Miscellaneous Fees and Levies Act, to be charged on petroleum at a rate of Ksh 1 per litre. This change, they argued, would streamline tax collection and reduce the financial burden on Insurance industry. KEPSA argued that if this must be, then specific vehicle categories essential for commerce and agriculture should be excluded from this tax since it will have a ripple effect on the goods on transit in terms of cost shifting to consumers.

KEPSA also addressed the taxation of family trusts, recommending the deletion of the proposal to tax the distribution of already taxed funds by a Registered Family Trust to its beneficiaries. This, they stated, would prevent double taxation and ensure fair treatment of trust distributions under the First Schedule to the Income Tax Act.

In terms of Value Added Tax (VAT), KEPSA emphasized the importance of retaining VAT exemptions for normal bread, gluten-free bread, and leavened bread to avoid increasing food inflation. They also proposed exempting financial transfer services from VAT to reduce the cost of financial transactions for businesses and consumers.

A significant part of KEPSA's memorandum focused on the proposed eco levy on plastic materials. KEPSA argued strongly for its removal, citing that a large percentage of household commodities are packaged in plastics. They warned that the eco levy would significantly impact household disposable income, thereby affecting the livelihoods of many Kenyans.

Moreover, KEPSA proposed exempting plant, machinery, and equipment used in the construction of a plastics recycling plant from taxes. The waste management sector currently supports over 150,000 jobs, both directly and indirectly, with the potential to expand to 500,000 jobs by 2032. Over 90% of these workers are from the lower socio-economic strata, meaning these funds significantly contribute to improving their livelihoods. KEPSA emphasized that rescinding tax incentives for the creation of recycling establishments would impede the sector's development. Therefore, it is imperative to preserve these incentives to support the expansion of plastics recycling, aligning with the nation's policy objectives.

Through these proposals, KEPSA aimed to influence the Finance Bill 2024 to better support economic growth while protecting the financial well-being of Kenyan households

Click here to access the KEPSA memorandum.