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President Ruto signs Finance Act 2023: Here’s what to expect

President William Ruto signed the Finance Bill 2023 into law today, Monday, June 26, 2023. It is set to go into effect from July 1, 2023. The Bill had been divisive right from its proposals to debates in the National Assembly due to the new proposed taxes on certain goods and services, as well as the increase of taxes on others.

Now that it has been signed into law despite opposition threats on rallying Kenyans against the government, here is what the country can expect going forward beginning July 2023:

All Kenyans will part with 1.5% of their salaries to pay for the government’s affordable housing scheme; and their employers are expected to contribute the same amount in their employees’ names. This will mean employees will take home less money and employers will either begin devising ways of cost cutting their wage costs by firing employees or rising to the challenge and meeting the government’s law.

On June 25, the Federation of Kenya Employers said,” The levy will increase wage costs by 1.5% and at the same time, reduce the take home pay of employees. We are likely to see an increase in agitation by workers demanding that employers increase wages.”

Additionally, the Act will now require employees earning more than Sh 500,000 a month to part with 35% of their salaries as Pay As You Earn (PAYE).

The Act will now impose a 16% Value Added Tax on fuel, up from 8%. This means that motorists, distributors and manufacturers will pay Sh 12 more for every liter of fuel they purchase. Business Daily reported that the Kenya Kwanza government intends on raising an extra Sh 50 billion from fuel taxes.

For consumers, this will mean they will pay higher bills for food as transportation costs from farms to markets will increase, public service transportation fare will also go up and electricity bills will soar to higher costs despite Kenyans previously complaining of high electricity bills.

Content creators will now also have to part with monies earned from their digital platforms. This is one of the newly introduced taxes in which social media content creators will hand over 5% of their earnings down from the proposed 15%. Previously, these content creators were not subjected to any taxation and with the influx of creators, especially on Instagram and YouTube, the government is set to rake in more money from their brand partnerships and ambassadorial roles.