Safaricom has joined a list of companies operating in Kenya that have strongly opposed the proposals contained in the Finance Bill 2024.
Safaricom during the Finance Bill 2024 public participation proceedings on Friday, June 7, 2024, raised concerns over the proposals before the National Assembly Finance and Planning Committee.
The Telco warned that if passed, the Bill could lead to negative effects on the economy including job losses and high costs of living.
The leading mobile network operator is opposed to the proposed increase of excise duty on internet data and mobile money transfer services provided by Banks and cellular phone services to 20% as contained in the bill.
According to Safaricom’s Senior Tax Manager Cynthia Koech, the increase in the operational cost will affect services such as M-Pesa, Hustler Fund, and Inua Jamii.
Safaricom list services to be affected by Finance Bill 2024
Further Koech warned that services such as online education and international money transfers will be affected.
“With the additional VAT coming through the commission expends to Safaricom and Safaricom not being able to claim the input VAT because the product that is supported is exempt it means that the person who will ultimately then bear the cost of this VAT will be you and I the customers who use M-Pesa,” said Koech.
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At the same time, Safaricom highlighted that increasing excise duty on mobile money fees will slow down the expansion of mobile money accessibility in the economy.
It further warned that the increase will disadvantage low-income households and lead to job losses derived from digital economy activities such as online jobs and digital content creation.
“Every time when you want to transfer money outside of Kenya then you can work through the Safaricom subsidiary to transfer today. That transaction is subject to excise duty at 15% but by proposing to increase the rate to 20% we are seeing different segments of the society that will be affected,” added Koech
Other Entities Break Down Proposals in Bill
Amnesty International and the Kenya Women Parliamentary Association also joined the list of entities that have rejected the Bill.
In their submissions, the entities cautioned against increased taxation on essential goods and services stating that it will increase the general cost of living and drive the country into an economic crisis.
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In particular, he Kenya Women Parliamentary Association which was represented by Dagoretti North Member of Parliament Beatrice Elachi during the proceedings voiced its rejections of the Eco Levy.
According to the association, the levy will increase the cost of essential goods such as sanitary cards and baby diapers by an extra Ksh150 per kilo.
The association warned that the increase will be an extra burden for households especially for households from poor backgrounds and persons with disabilities who are already burdened.
“The Ksh150 Kenya per kg is actually going to have an immediate implication on the livelihoods of many women and girls in Kenya so we recommend that a revision of the least of the items in the Eco Levy with a downward revision of essential Goods such as the cost of diapers and sanitary towels which may be bad in some for many households,” said Elachi.
Amnesty International and Jumia also presented their submissions before the Committee.
Both entities raised concerns about the introduction of the Motor Vehicle Tax and reclassification of zero-rated supplies to exempt supplies.
Committee rounds up public participation
The Departmental Committee on Finance and National Planning concluded the two-week public participation exercise on the Finance Bill, 2024 with a pledge to incorporate some of the views collated from stakeholders, to enrich the Bill.
The two-phased exercise saw the Committee receive oral submissions from over 130 organized groups drawn from various sectors of the economy.
It is expected that the Committee will conduct a town-hall style public hearing at Kenyatta International Convention Centre (KICC) on Monday.
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