Governance

Increased Taxation To Cause Rise in Airtime and Internet Cost

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KRA TAX Kenya Excise Duty Increase
It has come to our attention that there is an expected increase in excise duty on telephone and internet data services in Kenya. We have noted that it will increase from the initial 15% to 20%.

Kenya Government to Increase Excise Duty from 1st July

As per our knowledge, this is not part of the current Finance Bill. It is a proposed amendment that is supposed to take effect from 1st July.
According to the Financial Standard, excise duty has always been known as a sin tax. Basically affecting only drinking alcohol and smoking cigarettes.
However, the same has been noted on basic commodities such as bread and Maize flour.
Now recently, they took out the 15% VAT on bread and the likes and we all thought it was pro-mwanachi. Unfortunately, we are seemingly losing more.
Kenyans use their phones almost every single moment of the day and the government wants to fully exploit this.
For instance, we are considering that government services such as drivers’ licences, land transfers, parking and licence fees are all online.
Based on this, we predict it will affect data costs. This will in turn, affect internet access and penetration levels, innovation and employment.
With this, we can expect Kenya to joing Gabon as one of the highest tax paying country at 36% airtime tax.
Thinking of those self-employed youths who rely on the internet for their income this will be a major blow. However, the more loans we take, the more taxes we pay.

Going Downhill

The cost of airtime and will increase significantly making things a little bit harder for those that depend on these services.
Especially with this situation, those that are working from home entirely will be hit the hardest.
The prices most of the service providers have set are already on the higher side and many may not appreciate this move. Coupling this with the proposed fuel increase, it looks like a rather stressful month for Kenyans.
Aside from this, the bill also states that gaming and money transfer. The excise duty will now be at 7.5% for gaming and 12% for money transfer.
Lest we forget about betting and lottery tax which will go up to 30% from 20%.
The bigger question is, will increasing the cost of what has now become an essential service really expand the tax base?

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