Harmonise Changes in Tax Laws
The government began reviewing various tax laws including the
Value Added Tax (VAT) and Excise Tax Act in 2014, but is yet to do
the same with the Income Tax Act.
The tax – usually charged on profits from the sale of assets held for
at least 12 months – was suspended in 1985 as part of measures to
make Kenya more attractive to foreign direct investment, but tax
experts now argue that it should be reintroduced to put the country
in line with global trends.
We are losing a lot of revenue by simply not taxing wealth made
from capital gains leaving the working class to carry the country’s
financial burden,
Opponents of capital gain tax are however arguing that its
introduction in certain sectors of the economy could discourage
investment and slow down growth.
On the other hand the tax should be applied in areas such as the
sale of businesses to help boost the national revenue kitty.
The Finance Bill 2022 proposes to that the tax on disposal of property be
increased from 5% to 15% from January 2023 .Tax experts argue that a
number of the capital gains are attributable to inflation as the value of money
decreases over time therefore , an increase in the capital gain tax
should go hand in hand with the introduction of indexation.
Popular opinion is that the suspension of capital gains tax to
encourage investment has outlived its purpose and needs to be
reintroduced to enhance equity in tax payment. Taxing wealth will
help broaden the revenue base and nurtured an equitable tax regime
In conclusion, if the Bill is to be implemented Kenya’s revenue would
be growing at a higher pace by taxing the wealthy class.
The re-introduction should also factor in inflation, especially for
transactions involving disposal of property that was either acquired
or developed earlier.
By Chartafai.
