Kenya's President William Ruto has officially signed the Finance Bill into law following its approval by the National Assembly.
The core provision of the bill is an increase of VAT on fuel from 8% to 16%.
The law also provides that employers and workers will contribute 1.5% of their gross wages to a housing levy, to go into a fund that will then pay for the construction of low-income homes, a move strongly defended by the president.
"How much longer do we want these people to live in slums? In my estimation, we are sixty years late in making the decision that Singapore made. I think the time is now," Ruto said in early June.
Similarly, under the new law, the tax for creators of digital technology will be charged at a rate of 5%, while the tax on rates and tax on withholding insurance premiums are to be set at 12.5% and 16%, respectively.
Another major change that takes effect on July 1 is the introduction of a new Pay As You Earn tax rate of 32.5% for those earning monthly gross wages between 500,000 and 800,000 shillings ($3,600 – $5,700), and a new 35% rate for any gross wages over 800,000 shillings.
In addition, the revised income tax on rent has been slashed from the current 10% to 7.5%.
According to Ruto, the new fiscal law aims to stimulate the economy, provide jobs and increase revenues and is focused on solving the problems "faced by ordinary Kenyans."
A budget of 3.6 shillings will reportedly seek to maintain a delicate balance between servicing debt and stabilizing the economy.
On Wednesday night, the bill was supported by 184 MPs – mostly from the ruling party Kenya Kwanza – while 88 MPs mostly from the opposition Azimio Party opposed the amendments.