Just finished reading the memorandum by the Uhuru on the Finance Bill. It is a shame the media is just focusing on the 8% VAT on fuel. In the 20 page document the president has made ten recommendations as follows;
1.Definition of betting winnings to include the full payment without subtracting the expenses of the winner. Winnings to be taxed at 20%
2.Reduction of petroleum VAT from 16% to 8% and its implementation date changed from September 2020 to September 2018. Calculation of VAT not to include excise duty, fees and other charges.
3.Motor Vehicle Excise Duty of between 20% and 30%
4.Sugar confectioneries including white chocolate at Sh 20 per kg
5.Telephone and internet data services excise duty at 15% of excisable value (up from current 10%)
6.Money transfer services fees Excise duty at 20% of excisable value (up from current 10%)
7.Other fees charged by financial institutions Excise duty at 20% of excisable value (up from current 10%)
8.Reduction of lotteries, betting and gaming taxes from 35% to 15%
9.Housing Development Fund tax to be paid by the employee at 1.5% and employer at 1.5% of the monthly basic salary. Penalty of 5% for employer who fail to submit the contributions
10.Adulteration levy on kerosene at the rate of KShs 18 per litre. Disel and Kerosene to cost the same to end adulteration
I heard a man being interviewed about the impact of VAT on fuel by a TV station. He says that the kerosene he can now afford to buy is no longer enough to finish cooking a meal. So he cooks the vegetable stew and takes the ugali half cooked.
As MPs vote on this issue on Thursday let them know the impact on Kenyans is very direct and dire. Let them remember what it means for those who voted for them. Let the words of their party leaders mean nothing in view of the pain their voters are going through.
Giving Jubilee more money is like collecting water using a sieve.
Kenya to import mitumba after coronavirus pandemic
Kenya is set to lift the ban on imports of second-hand clothes once the Covid-19 pandemic is over, the Industry, Trade and Co-operatives Cabinet Secretary Betty Maina has said.
The Cabinet Secretary last Wednesday announced an immediate temporary suspension of the importation of second-hand clothes as a measure to stop importing the SARs-Cov-2 virus that causes Covid-19 disease.
Ms Maina said the action taken is in line with the conditions as set out by the Kenya Bureau of Standards (Kebs).
“The government has suspended importation of second-hand clothes with immediate effect to safeguard the health of Kenyans and promote local textiles in the wake of coronavirus,” said Ms Maina.
“Most of the Mitumba imports come from China and Pakistan, countries which are the epicentre of the coronavirus pandemic. The decision is intended to safeguard Kenyans against the spreading of the coronavirus and is therefore a health issue,” she said.
In an interview with the The EastAfrican, Ms Maina said the Kebs will enforce the suspension as we wait for the situation to improve.
“It is a requirement by the Kebs to take such an action in times of an epidemic like the Covid-19,” she said.
A recent study by the US Centres for Disease Control and Prevention shows that the virus can stay longer on different surfaces, including clothes.
Ms Maina, however, said the temporary ban will not in any way affect the policy on Mitumba imports from the US.
Under the African Growth and Opportunity Act, Kenya sold about Ksh40 billion ($400m) worth of textiles and clothing to the US.
“This does not in any way affect our policy on our imports from the US. The decision is strictly an urgent measure to curb the spread of the coronavirus,” added Ms Maina.
World Bank pushes G-20 to extend debt relief to 2021
World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.
“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.
He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.
The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.
People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.
For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.
Debt burdens, already unsustainable for many countries, are rising to crisis levels.
“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.
Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans
The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.
“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”
According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.
Tighter Reins on Platforms for Mobile Loans
The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.
Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.
Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.