Greetings and welcome to the tenth Money Weekly Roundup of 2024! 

This week, petrol prices fell below the Ksh200 mark after a Ksh7 reduction with diesel down to Ksh190 per litre in Nairobi. But Treasury CS Njuguna Ndung’u’s remarks on the need to redesign the country’s tax system hint at even tougher times ahead for the taxpayer. 

Meanwhile, Kenya Kwanza senators voted to pass the Affordable Housing Bill, 2023, quashing all amendments suggested by their Azimio colleagues. This marks a significant step towards legalising President William Ruto’s housing plan. 

As always, we’ve included some of our favourite personal finance articles in our Finance Tips section below.

Let’s dive in.

NEWS RECAP

What happened this week

💸 CS Ndung’u Proposes New Tax System

To sum up his contributions at the 12th African Fiscal Forum, Treasury CS, Njuguna Ndung’u, said that the current tax regime in Kenya has reached the end of the road. He emphasised that, in order to mobilise enough revenue, the tax policy has to be redesigned.

Here are some highlights: 

• Current Tax Regime: CS says as presently structured, it cannot deliver anything above 14.1% in tax revenue to GDP ratio. 

• Medium Term Revenue Strategy (MTRS): Plans to get the tax revenue to GDP ratio upwards of 20% over the next five years. 

• Public Debt: Treasury wants to change the borrowing ceiling from a numerical value (Currently Ksh10 trillion) to a “debt anchor” of 55% of GDP. Read More.

• Empirical Research to Guide Redesign: Focus will be on raising compliance, alignment with economic needs, “bottom-up” agenda, and revenue consolidation. 

• 16% VAT on Bread and Milk: CS says zero-rating has failed to cushion the targeted poor and instead benefited the middle class.

• Personalised Refunds: Consumers to get personalised VAT refunds from KRA using receipts for zero-rated items.

Fivefold Rise in Property Taxes: CS proposes a review of property taxes, which he says were last updated in the 1970s. This, he says, could lead to 500% increase in collections. Read More.

🏠 Senate Passes Affordable Housing Bill

The Affordable Housing Bill, 2023, sailed through the Senate with 27 votes from Kenya Kwanza Senators against 10 votes from the opposition, Azimio. All amendments proposed by the opposition did not pass; they included:

• Capping deductions at Ksh2,500

• Deducting 1.5% of net salary instead of gross 

• Exempting mortgage holders, rural landowners and farmers or business persons with less than Ksh288K annual turnover.

• Exempting individuals aged over 50 engaged in informal business activities

• Exempting persons with five years left to retirement

• Giving levy money to county governments as conditional grants

Failure to pay the levy will attract 3% interest per month and will be recovered as a civil debt. Read More.

✋ Manufacturers Protest Costly Liquor Crackdown

The fight against illicit brew continues. Last week, Interior CS, Kithure Kindiki, issued new guidelines on the manufacture, distribution, and sale of alcoholic products in a bid to curb the proliferation of illegal manufacturing and consumption of illicit brew.

The Kenya Association of Manufacturers (KAM) has, however, protested some of those guidelines, terming them costly and punitive. Read More.

These are some of their concerns: 

• Loss of revenue from suspension of licences

• Installing quality control laboratories for licence reinstatement is expensive

• Acquiring gas chromatography machines is punitive due to high costs 

• New minimum packaging of 750ml from 250ml would lead to losses

• Lack of clarity on definition of second-generation alcohol.

• The need for one legal reference point for prescribing hours of operation

• Last mile deliveries to be impacted by restricting alcohol distribution after 6pm

• Lack of clarity on what constitutes residential areas

KRA says it has intercepted illicit products valued at over Ksh897 million, so far. Read More.

🛑 Remotasks Ends Operations in Kenya

Remotasks, a popular online work platform, is reported to have ended its operations in Kenya. Kenyans took to social media to share that they are no longer able to access the site.

Some shared an email from the company stating, “We are reaching out with an important announcement regarding Remotasks operations in your location. We are discontinuing operations in your current location effective March 8, 2024.”

However, those who have pending pay for projects completed will still get remunerated. “As part of this change, you have been off-boarded from your current project. You will receive payments associated with your work completed via the payment account set up on your profile.” Read More.

💪 Shilling Rallies to 8-Month High

The Kenya shilling has been staging a stable comeback since January this year. This week, the shilling reached an 8-month high to trade at Ksh137.49 against the dollar on Thursday as it clawed back its value against the greenback.

The recovery of the Kenyan shilling can be attributed to foreign inflows and the resolution of the Eurobond, which is supposed to mature in June. Read More.

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MONEY TIPS & TOOLS

This week’s finance tips

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What is Competitive Salary?

In today's competitive job market, understanding what constitutes a competitive salary is crucial if you are seeking fair compensation for your skills and expertise. Our video of the week will explore the intricacies of determining a competitive salary, covering factors such as industry standards, location, experience, and negotiation tactics. You can also read more about it here.

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That’s a wrap for this week’s Money Weekly!

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Eric and the Money254 editorial team.