Kenya Bankers Association (KBA) has sounded alarm warning of an impending massive exodus from the formal banking systems if the Finance Bill 2024 is implemented without amendments even as the Departmental Committee on Finance and National Planning chaired by Molo Member of Parliament (MP) Kuria Kimani yesterday began public engagements on Finance Bill 2024.
Kuria team will hold consultations with key stakeholders from various economic and financial sectors.
Speaking on a local TV station yesterday, acting KBA Chief Executive Office (CEO) Raimond Molenje noted that the proposals contained in the Bill will limit bank transactions.
“There is a 25 per cent increase and this just makes transactions very difficult and unfortunately people are forced to move out of the formal banks and mobile banking.” Molenje stated.
Speaking during the first day of public hearings on the Bill, the Kuria led committee assured the stakeholders that the committee was keen to review the impact of the Finance Act, 2023, so that it can inform members’ decisions on the provisions in the current Bill.
“I want you to have a look at the Finance Act of 2024 when it is finally enacted, and compare it with the current Bill that we’re considering, and see the difference. We are keen to realise a progressive law that will help claw back economic growth.” Kimani said.
On his part, Molenje argued that the Bill seeks to increase the exercise duty from 15 per cent to 20 per cent which will further raise the transactions fees.
He added that the situation will be worsened by the Value Added Tax (VAT). According to Molenje, the new tax proposals would raise the transaction fees by 25 per cent.
According to Molenje, the implications of a cash economy include limited access to loans from both lenders.
“When they move out of the formal transactions, they will not be able to access the banks and digital loans.” Molenje asserted.
Further, he warned that businesspeople will start leaving in fear of losing their money due to the cash accumulated in their sales.
To avert the outcome, the Kenya Bankers Association appealed to President William Ruto’s administration to slow down some tax measures.
The Departmental Committee on Finance and National Planning has assured stakeholders that it will scrutinize all the provisions contained in the Finance Bill, 2024, before enacting the legislative proposal into law.
Among those scheduled to appear before the Committee include the Kenya Association of Manufacturers (KAM), Institute of Economic Affairs and Institute of Public Finance
Others stakeholders are the Institute of Certified Public Accountants of Kenya (ICPAK) as well as Deloitte & Touche.
The Kenya Association of Manufacturers (KAM) which represents the interests of the manufacturing sector has already raised concerns on some of the proposals in the bill.
According to KAM the proposal to impose the Export Investment Promotion Levy (EIPL), under the Miscellaneous Fees and Levies Act, will be unfavourable to local industries.
Other proposals affecting manufacturers include introduction of eco-levy on selected goods manufactured in Kenya and the proposal to increase the Import Declaration Fund (IDF) from 2.5 per cent to 3 per cent.
