Consumers get respite as court suspends new taxes :: Kenya

The High Court granted consumers a temporary stay after it suspended the implementation of new tax measures.

In a reversal at the request of the Treasury to finance its budget of 2.55 billion shillings, the court decided that certain taxes contained in the 2018-2019 budget bill should be set aside.

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Taxes affected include excise duties imposed on mobile money transactions, bank transactions for amounts over 500,000 shillings, kerosene, bottled water and chocolate.

These are some of the items whose prices rose as of July 1 after Treasury Secretary Henry Rotich badigned them additional duties in his budget speech.

Some mobile money service providers and banks had already informed their customers of tax changes.

M-Pesa de Safaricom had adjusted her rates in accordance with Mr. Rotich's directive.

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"Under the 2018 Finance Bill and the Law on the Provisional Collection of Taxes and Fees, we have made … adjustments to our M-Pesa tariffs," said Safaricom in an advertisement.

In her verdict, High Court Judge Wilfrida Okwany stated that the government would not suffer losses when the application of new taxes would be frozen.

"I am convinced from the material presented by the petitioner that there is a probability of success and I find that it will be necessary to preserve the object pending the 39, Hearing and Determining the Petition on the Constitutionality of the 2018 Finance Bill, "Judge Okwany ruled.

The judge issued a discharge regarding the potential judgment.

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"If the case is heard and the court finds that the implementation of the bill is constitutional, there will be no prejudice to the respondents because the Bill will be immediately implemented.

"If, on the other hand, the court finds its unconstitutionality, there will be no practical way to compensate Kenyan taxpayers.

"I repeat that I am inclined to grant the application at this stage for the above reasons."

The case was filed by activist Okiya Omtatah, who was seeking orders to suspend the implementation of these new tax measures.

Earlier in the day, the judge issued separate orders suspending the Robin Hood tax that was to be imposed on bank transactions of more than 500,000 shillings.

According to the new fiscal measures, those who send 500,000 shillings and more through the intermediary of banks and other financial institutions would transfer 0.05 per cent of their money to the tax authorities, the government seeking to take to the rich to finance one of the presidents Uhuru Items of the Big Four Kenyatta agenda, universal health care.

The case was filed by the Kenya Bankers Association. In his budget speech, Rotich proposed to increase excise duties on mobile money transactions from 10% to 12%. It will probably affect the poor the most.

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"Mr. Speaker, our economy has a well-established financial sector in the region with large sums transferred monthly, so that the government gets a fair share of its revenues. these financial activities and to fund essential government programs, I propose to introduce a Robin Hood tax of 0.05 percent on any amount of five hundred thousand shillings or more transferred by banks and other financial institutions ", said Rotich.

Okwany J. reiterated that the implementation of excise tax on funds transferred by banks was an important issue that could not be left to the vagueness or individual interpretation by financial institutions.

Subjective interpretation

"The Applicant raised the question of ambiguity, and the law in question calls the attention of those questioned to make a clarification (so that it is not left) at the same time. subjective interpretation of those who are supposed to implement it, "Okwany said.

She added that the court had noted that the disputed bill was still in its infancy, as it had not yet been enacted by law.

The badociation has appointed Kenya tax authorities and attorneys general.

[Faith Karanja, Dominic Omondi and Kamau Muthoni]