Income Tax Bill 2018
Kenya Revenue Authority

Mudavadi now asks MPs to reject tax Bill

He warned that the Bill, which proposes among others a higher income tax of 35 per cent, for individuals earning more than Sh750,000 will hurt the economy if passed into law.

“By increasing tax to 35 per cent, the government is on a blind fishing expedition. Very few Kenyans earn more than Sh750,000 per month. Increasing tax will therefore not yield any meaningful revenue to the government,” he said.

Speaking at a press briefing Saturday, the ANC leader said increasing income tax for Kenya’s top earners is unreasonable, saying it will not in anyway reduce the bloated wage bill.

According to the Income Tax Bill 2018, the Kenya Revenue Authority (KRA) proposes to deduct 10 per cent on the first Sh147,580 and 15 per cent on the next Sh139,043 from your payslip.

Individuals with income of more than Sh9 million per year will part with 35 per cent of their income to the taxman while those earning from Sh564,709 to Sh9 million will remit 30 per cent.

The Bill, which promises significant overhaul of the Income Tax Act, also targets large corporations which will pay top rates for income of more than Sh500 million.

Saturday, Mr Mudavadi warned that targeting large corporations will see most of them cease operations in the country and cautioned that new investors may seek opportunities in neighbouring nations that offer tax incentives.

“With all disposable income going to the government, dead will be the new start-ups and housing investments. The high tax rates will discourage new investors who will relocate to other regions,” he warned.

According to the Bill, an export processing zone enterprise which does not engage in any commercial activities will be subject to corporate tax rate of 10 per cent for the first 10 years from the date of its first operation and thereafter 15 per cent for another 10 years.

The ANC leader now warns that the proposals could end up hurting the economy and killing job opportunities.

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