The National Assembly Finance and National Planning Committee has rejected a proposal by Finance Cabinet Secretary Ukur Yatani to impose tax on bread, a staple food in many households in Kenya.
The committee chaired by Homa Bay Woman Representative Gladys Wanga recommended that provisions to raise VAT on bread be deleted from the Finance Bill, 2021.
Currently, bread prices range between Ksh50 to 55 depending on the brand.
The MPs have also opposed the variation of excise duty on imported motorcycles.
The recommendations were highlighted on Tuesday during the second reading of the Bill.
Yatanin had proposed to move the treatment of value added tax (VAT) on the supply of ordinary bread from zero to exempt.
The lawmakers argue that the proposal will raise the cost of living on common wananchi who are struggling to make a living amid the negative effects of the Covid-19 pandemic on the economy.
“Ordinary bread is a staple for most families today. We propose this to remain zero-rated because even if you say you are moving it to exempt, the cost will be put on Mwananchi through the raising of the cost of bread,” said Gladys Wanga.
On motorcycle imports, the Wanga led committee rejected the proposed variation of excise duty from a flat rate of Ksh11,608.23 to a varied rate of 15 percent.
“The Committee is unanimous that we need to support the bodaboda industry which has contributed significantly to youth employment,” added Wanga.
“It might be complicated to understand right now and we fear that vendors might take advantage of the change to overcharge buyers.”
The boda boda industry is emerging as one of the biggest drivers of the economy.
In October last year, President Uhuru Kenyatta revealed that the sector generates Ksh980 million every day.
The Head of State said this when he met the Boda Boda Safety Association of Kenya (BAK) at the Pumwani Social Hall, Nairobi.
“With an average daily earning of 700 shillings a day, the sector’s annual earnings are estimated at 357 billion shillings. Every single day, boda boda operators collect 980 million shillings,” said President Kenyatta.
The committee further recommended that locally manufactured confectionery to remain exempt of excise duty while raising the effective rate of excise duty on imports from Ksh20 per kilo to Ksh35.
In its report, the committee proposed higher taxes for gamblers.
They recommended a hike to excise duty on waged amounts from the proposed rate of 20 percent to 30 percent.
The committee now wants gambling taxes imposed on all categories of betting including gaming, prized competitions and lotteries.