Why Kenya’s Finance Bill Has Sparked Protests

Kenya is currently facing a wave of protests triggered by the government’s proposed Finance Bill. The bill, which aims to introduce new taxes and raise existing ones, has sparked widespread public outcry and opposition from various sectors of society.

The Finance Bill, 2024, includes several controversial measures designed to increase government revenue. Among the proposed changes are higher taxes on fuel, housing, and mobile money transfers. The bill also seeks to impose a digital services tax and increase the value-added tax (VAT) on essential goods.

One of the most contentious aspects of the bill is the proposed hike in fuel taxes. Under the new bill, the excise duty on petroleum products would increase significantly, leading to higher fuel prices. This measure has been met with strong opposition from both citizens and industry groups, who argue that it will lead to increased transportation costs and higher prices for goods and services across the board.

Another major point of contention is the proposed housing levy. The bill suggests introducing a mandatory 3% housing levy on employees’ gross salaries, which employers are also required to match. The government claims that the levy will fund affordable housing projects, but critics argue that it places an undue financial burden on workers and businesses, especially during a time of economic hardship.

The proposed tax on mobile money transfers has also raised concerns. Mobile money is widely used in Kenya, especially among lower-income populations and small businesses. The new tax is expected to increase the cost of transactions, affecting the livelihoods of many who rely on mobile money for their daily financial activities.

Opposition leaders have been vocal in their criticism of the Finance Bill. Raila Odinga, a prominent opposition figure, has called the bill “draconian” and “anti-people.” He argues that the proposed taxes will exacerbate poverty and inequality in the country. “This bill is a direct attack on the livelihoods of Kenyans,” Odinga said. “We must stand together to oppose these unjust measures.”

The protests against the Finance Bill have seen large turnouts in various cities, with citizens taking to the streets to voice their discontent. Demonstrators have been carrying placards and chanting slogans against the bill, calling on the government to withdraw the proposed measures.

In response to the public outcry, President William Ruto has defended the Finance Bill, stating that the new taxes are necessary to address the country’s fiscal challenges and fund essential development projects. “We need to make tough decisions to secure our economic future,” Ruto said. “These measures are crucial for our nation’s development and prosperity.”

The government has also argued that the increased revenue from the new taxes will help reduce the national debt and fund key infrastructure projects, which are vital for long-term economic growth. However, many Kenyans remain unconvinced, fearing that the immediate impact of the tax hikes will outweigh any potential long-term benefits.

Economic analysts have weighed in on the debate, with some suggesting that the government should explore alternative revenue sources or cut unnecessary expenditures instead of imposing additional taxes. “While the need for increased revenue is understandable, the government should consider more balanced approaches that do not disproportionately affect the vulnerable populations,” said Dr. Kwame Owino, an economist at the Institute of Economic Affairs.

The fate of the Finance Bill remains uncertain as debates continue in Parliament. Lawmakers are under pressure from their constituents to oppose the bill, while the government is pushing for its swift passage to address fiscal deficits.

Despite the turmoil, there is a glimmer of hope that constructive dialogue between the government and stakeholders can lead to a more balanced approach. As protests continue, the focus remains on finding a solution that addresses the country’s financial needs without placing undue strain on its citizens.

Source: reuters.com