President Ruto Approves Finance Bill 2023, Raising Budget

On Monday, President William Ruto gave his assent to the Finance Bill 2023, following the approval of tax measures by lawmakers. The aim of these measures is to generate revenue for the Sh3.6 trillion budget. This budget will be the first for the Kenya Kwanza administration, which has emphasized the Bottom-up Economic Transformation Agenda consisting of five pillars. The allocation of the budget will focus on a careful balance between debt servicing and stabilizing the economy, with Sh1.5 trillion designated for recurrent expenditure, Sh718 billion for development, and Sh986 billion for public debt servicing.

The Finance Bill was passed by the National Assembly Finance and National Planning Committee, chaired by Kuria Kimani, after a third reading. However, the bill faced opposition and sparked heated debates between the ruling party and the opposition. The National Assembly discussed 87 proposed amendments, with some being approved during a late-night session on Tuesday.

One significant change that was approved is the increase of value-added tax (VAT) on fuel from 8% to 16%. The bill received support from 184 MPs, mostly from Kenya Kwanza, with the exception of Githunguri MP Gathoni Wamuchomba. On the other hand, 88 MPs, mainly from Azimio, opposed the amendment.

Another contentious issue was the Housing levy, which was initially proposed at 3% but was amended to 1.5% of gross pay and converted into a tax. Previously, the levy was intended as a savings scheme that Kenyans could claim after seven years.

Additionally, digital creators will face a 5% tax, reduced from the initial proposal of 15%. Betting and insurance withholding taxes will be set at 12.5% and 16% respectively.

The passage of the Finance Bill means that Kenyans will have to contribute more from their own pockets to finance President Ruto’s first budget as Head of State.