Treasury mulls cuts to ineffective tax breaks

Manufactures have come under sharp criticism from the National Treasury over failure to push down benefits from tax exemptions and zero rating of input to help cushion consumers.

This has seen the Treasury move to overhaul the Income Tax Act, with a view of simplifying the country’s taxation system to minimize the number of tax breaks given.

Treasury cabinet secretary Henry Rotich said while there is need to cushion consumers form high the high cost of living, failure to pass on benefits from tax breaks has led to a change in policy.

“We can’t have a law which has everything exempted so why have the law? The intention of the law is to raise revenue in a simple and efficient manner. It’s a balancing thing that we have to do because we will not please everybody obviously because we have seen where goods a zero rated but not passed on to the consumer,” Mr Rotich said in an interview with Citizen Digital.

The CS will this afternoon table his financing plans for the Ksh3.07 trillion in Parliament, with many Kenyans bracing themselves for changes that could see them tighten their belts further.

Mr Rotich said a simplified income tax law, would also do away with push for tax refunds by companies, making it easier to collect revenue.

“We don’t a tax system that creates complications and we have to do refund arrangements because it’s been a headache to deal with refunds,” he said.