This archive report was first published on 10 December 2019.
December 10, 2019, marked a significant moment in Kenya's history with the release of the BBI Report, which proposed a range of reforms aimed at addressing the country's lopsided taxation system.
According to the report, the current system is failing to generate sufficient revenue, is complex and difficult to navigate, and is losing legitimacy in the eyes of the public.
One of the key recommendations of the report is to broaden the tax net by introducing a new system that would exempt the lowest earners from paying taxes, while imposing a higher consumption tax on goods and services.
Under the proposed system, families earning less than Sh540,000 per year would pay no taxes, while those earning between Sh540,000 and Sh1.2 million would be taxed at a rate of 10 percent, and those earning above Sh1.2 million would be taxed at a rate of 20 percent.
The report also proposes the consolidation of various taxes, including duties, excise, levies, and VAT, into a single VAT rate of 30 percent, with exemptions for raw food products, medical services, and other essential goods and services.
As a financial analyst, Deepak Kumar notes that the current system is 'failing to generate sufficient revenue, may well be jamming up the economy and is starting to lose legitimacy in the minds of Wananchi.'
The BBI Report's proposals have been welcomed by many as a step in the right direction towards creating a more fair and progressive taxation system in Kenya.
