Finance Bill 2024: Why Kenya’s Gen Z are protesting

Kenya is in the process of introducing a new law in that country, a law which is part of the 2024/25 budget statement. Named, the Finance Bill 2024, the bill when passed would increase some existing taxes and introduce new ones.

As a result, the bill has met stiff opposition from the citizens, especially the youth. The bill when introduced, will see the increment in taxes on bread, cars, mobile phones, sanitary towels and vegetable cooking oil. A new tax known as motor vehicle tax is being introduced by the bill and will be pegged at 2.5%.

Also, withholding taxes of 3% and 5% on goods supplied to public facilities will be introduced by the bill. A new tax known as digital content monetization tax would be introduced and requires residents and non-residents to pay 5% and 20% respectively on income earned through digital platforms such as YouTube content.

Additionally, the bill will introduce a new tax called the economic presence tax at a rate of 30% payable by non-residents who operate digital marketplaces in the country. The new Finance Bill 2024 also proposed that expenses such as the Social Health Insurance Fund, post-retirement medical fund and affordable housing levy contributions be made classified as deductible expenses.

Some services which were previously VAT-exempt have also been repealed by the bill making them VAT deductible at the current 16% VAT rate. These services include:

• issuing of credit and debit cards;
• telegraphic money transfer services;
• foreign exchange transactions, including the supply of foreign drafts and international money orders;
• cheque handling, processing, clearing and settlement including special clearance or cancellation of cheques;
• issuance of securities for money, including bills of exchange, promissory notes, money and postal orders;
• the assignment of a debt for consideration; and
• the provision of financial services on behalf of another on a commission basis.

Some insurance and reinsurance services which were VAT-exempt would now also be VAT deductible at the current rate of 16%.

Additionally, the bill will repeal the VAT-exempt status of some services in the tourism industry including:

• taxable goods for direct and exclusive use for the construction of tourism facilities, recreational parks of fifty acres or more, convention and conference facilities upon recommendation by the Cabinet Secretary responsible for matters relating to recreational parks;
• specially designed locally assembled motor vehicles for transportation of tourists, purchased before clearance through Customs by tour operators upon recommendation by the competent authority responsible for tourism promotion; and
• taxable services for direct and exclusive use for the construction of tourism facilities, recreational parks of fifty acres or more, and convention and conference facilities upon recommendation by the Cabinet Secretary responsible for matters relating to recreational parks.

Apart from the above, the government also through the new Finance Bill 2024 would introduce a 16% VAT on betting, lotteries and gaming.  Certain exemptions in the manufacturing and construction sector would also be repealed if the Finance Bill 2024 is passed.

According to the government, the target is to reduce its dependence on borrowing to fund government expenditure. The new and amended taxes are projected to raise at least 346.7 billion shillings ($2.7 billion), equivalent to 1.9% of GDP. This will help the government reduce the budget deficit from 5.7% to 3.3% of GDP.

However, days of protest from the youth and an intended occupation of Parliament on Tuesday, June 25, 2024, by the protestors have pushed the government to rethink. While key government leaders initially called the bluff of the protestors, they have now decided to take a listening posture.

The government took a step back by scrapping taxes on bread, car purchases, mobile and financial services. According to the National Treasury, the scrapping of those taxes would reduce the government’s projections by 200 billion shillings ($1.5 billion), which is more than half of the total projections.

A statement said, “The Finance Bill has been amended to remove the proposed 16 per cent VAT on bread, transportation of sugar, financial services, foreign exchange transactions as well as the 2.5 per cent Motor Vehicle Tax.”

“Additionally, there will be no increase in mobile money transfer fees, and Excise Duty on vegetable oil has also been removed.”

Abductions and deaths: The Finance Bill 2024 protests

Despite the youth largely engaging in peaceful protest, two of them have reportedly fallen victim to police actions. A 21-year-old man named Evans Kiratu died from injuries he sustained when he was hit by a “tear gas canister”. Another young man, a 29-year-old died after he was shot by police during the protest in Nairobi.

Aside from those that have lost their lives and the many who are injured, some abductions have also taken place with all being linked to the protest. First, a medical doctor, Dr. Austin Omondi who started the “Medics for Kenya” to provide healthcare services to the protestors was abducted by unknown men. He was abducted while leading a blood donation exercise to help injured protestors who might need blood.

His abductions evoked an immediate response from the Kenya Medical Practitioners and Dentist Union (KMPDU). The union threatened to withdraw their services on Monday if the doctor was not released.

“We demand the immediate and unconditional release of Dr Austin Omondi. Should he not be safely returned by midnight, we will initiate the closure of all public and private medical services to locate our colleague,” Davji Atella, the General Secretary for the union said.

According to Atella, Dr Austin Omondi reported that “strange people have been calling him and issuing death threats to him due to his involvement with the ‘Medics for Kenya’ activities where young medics have been offering free medical aid and leading in [a] blood donation drive to help injured protesters.”

However, KMPDU in a statement on Sunday evening, June 23, said their colleague has been released. “Our colleague Austin Omondi has been released. We condemn in the strongest terms possible the impunity of this government the threats, intimidations and the act of fear-mongering can not work.” Dr Austin Omondi was dropped off near a police station following his release.

Another high-profile person who was abducted was Lesley Muturi, the son of Attorney General Justin Muturi. He was allegedly abducted by Police after he left a nightclub with friends. Mark Mwenje, Embakasi West legislator who was with Lesley Muturi at the time of his abduction said the police forced Lesley to drive with them after the friends left a popular nightclub on Dennis Pritt Road, Kilmani.

“We were in Kilimani, and my friend Lesley Muturi, son to AG Justin Muturi, was just arrested by the police here on the road. I was the one following him, and this is his car,” the MP said in a self-recorded video that has since gone viral.

However, the Attorney General who confirmed the news of the abduction has now also confirmed that his son has been released according to Citizen TV.

Meanwhile, churches in Kenya have joined in the support for the youth asking the government to listen to the protestors while urging the protestors to avoid insults and violence.

The protests which started last week will continue until Tuesday when the youth will converge at the Parliament House. They are urging all Kenyans to come out in their numbers to support their protest against the Finance Bill 2024.