Kenyans might soon start avoiding the existing mobile money transfer services if President William Ruto’s new tax plans go through, experts now say.
They say that in the proposal, there is a suggestion to raise excise duty on fees charged for money transfer from 12 to 15 per cent.
They have warned that this, if implemented, will see Kenyans come up with other ways of sending money to evade the attempt to tax their money.
Mr Job Kabochi, a partner at Indirect Tax Services, says that Kenyans are very innovative and will be seen coming up with new strategies to evade the tax.
“Kenyans are very innovative and if you are going to find it expensive sending money through the traditional money transfer platforms, you can expect an industry is going to grow. There could be a parallel system that thrives in this kind of an environment,” he has said, while dismissing the tax plan as bad.
He has also admitted that the cost of living will worsen through the taxes, especially the proposal to increase Value Added Tax (VAT) on petroleum products from 8 to 16 per cent.
He has cautioned that the effects of this will be felt by almost everybody in the country and not only those directly handling the product.
“VAT on petroleum has always been the intention of the government. These taxes tend to be regressive, it doesn’t matter whether you are a boda boda rider or somebody using petroleum products for manufacturing. You can expect the cost of living to increase because of this change,” he has warned.
Yesterday, the opposition also condemned the planned tax hike, accusing Ruto of turning against the Hustlers he promised to lessen the burden for.