The Finance Committee of Kenya's National Assembly (lower house of parliament) yielded to criticism from various stakeholders and removed some controversial parts of the 2024 Finance Bill after the protests, dubbed "Occupy Parliament," broke out in the capital, the presidency said on Tuesday.
"The Finance Bill has been amended to remove the proposed 16% VAT on bread, transportation of sugar, financial services, foreign exchange transactions, as well as the 2.5% Motor Vehicle Tax," the statement read.
In addition, fees for mobile money transfers will not increase, and the excise duty on cooking oil has also been eliminated. The housing fund and proposed social health insurance taxes would not be subject to income tax, and the proposed eco levy would only be levied on imported finished products that contribute to the generation of e-waste, the presidency stated.
Earlier in the day, police used tear gas to disperse demonstrators and detained at least a dozen people, according to the AFP.
Parliamentarians are due to begin considering the text of the bill on Tuesday afternoon, with a vote on it scheduled until June 30.
The tax policies of William Ruto's government have faced some criticism since the start of his presidency in August 2022, leading to a number of protests in the spring of 2023. Under him, income tax and healthcare contributions increased significantly, and VAT on gasoline also doubled, rising to 16%.
In May, inflation stood at 5.1% year-on-year, with food and fuel prices rising 6.2% and 7%, according to the Central Bank of Kenya. GDP growth is expected to slow to 5% this year after reaching 5.6% in 2023 (4.9% in 2022), according to World Bank forecasts. The country's public debt is about 10 billion Kenyan shillings ($77.8 million), or about 70% of GDP.
However, Ruto said "tough" economic decisions had borne fruit, citing a nearly halving of inflation from 9% in 2022 to May levels and a strengthening of the shilling against the US dollar.
He added that the government aims to balance the budget within the next three years, which will cut down on borrowing and help the country live within its financial limits.