Kenyan president proposes tax hikes on money transfer services

NAIROBI: Kenya’s president has proposed hiking taxes on mobile payments and other money transfer services, documents sent to parliament this month showed, amid a tussle in government over how to boost revenues without hurting the poor.

Uhuru Kenyatta proposed increasing the excise duty on mobile money transfer fees from 10 per cent to 12 per cent, documents reviewed by Reuters showed.

He also proposed a 20 per cent excise duty on the fees charged by banks, money transfer services, and other financial institutions for each money transfer they do.

Parliament will hold a vote on the measures on Thursday.

The latest proposal comes as Kenyatta, re-elected last year after an extended and bloody election, seeks to implement planned tax hikes and other measures in this year’s budget that were designed to fund a range of government development goals including universal healthcare and affordable housing.

Lawmakers and some members of the public have resisted the measures, particularly a new tax on petroleum products.

Kenyatta said on Friday the tax is necessary, but that he wanted to cut it to 8 per cent from 16 per cent. In the documents, Kenyatta asked parliament to reduce government expenditure by 55 billion Kenyan shillings ($546.18 million) from the 2.72 trillion shilling budget proposed in June.

The president has not yet signed the budget due to the dispute over planned tax hikes.

In addition to the new fuel tax, the president has also asked parliament to approve an additional charge of 18 shillings per litre of kerosene that poor households use for lighting and cooking.

He also proposed an excise duty of 15 per cent on internet telephone services.

Kenya’s biggest mobile phone operator Safaricom said in June it is opposed to any tax rise on mobile phone-based transfers, arguing that it would mainly hurt the poor, most of whom do not have bank accounts and rely on mobile transfer services such as their widely used M-Pesa.

huru Kenyatta proposed increasing the excise duty on mobile money transfer fees from 10 per cent to 12 per cent, documents reviewed by Reuters showed

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