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MP cautioned against increasing taxes in new budget

Legislators have been advised to veto any tax increases from the National Treasury.

The Parliamentary Budget Office (PBO) – a team of economists and tax experts who advise MPs on the budget and the economy – instead wants the Government to look into alternative means to raise revenues.

“Avoid increasing taxes, especially at this juncture. Increasing taxes can be reconsidered in future. Reduction of unnecessary exemptions can boost revenue collection,” said PBO in a report titled Budget Options for 2019/20 and the Medium-term.

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The report comes less than four months to the start of the next financial calendar, which begins in July.

In the current financial year ending June 30, Treasury introduced a number of new taxes, including the eight per cent value-added tax (VAT) on petroleum products, Sh18 adulteration fee per litre of kerosene as well as a 1.5 per cent National Housing Development Fund on gross monthly earnings of employees which are to be matched by employers. Other revenue measures include the doubling of duties on money transfers to 20 per cent as well as higher taxes on mobile phone calls, internet usage and mobile phone cash transfers.

The raft of revenue financing measures, noted the PBO, have increased the general tax burden in the country.

Parliament has already received Budget Policy Statement (BPS) 2019 which has proposed to overhaul the income tax, a situation that will see employers and employees hit by more taxes as part of the Government’s austerity measures.

The Government plans to table a budget of Sh2.7 trillion for the upcoming 2019/2020 financial year. BPO wants Treasury to consider enhancing revenue collection through non-chargeable means such as sealing of revenue loopholes.

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