Railway levy cuts save taxpayers Sh3.6 billion
Friday May 19 2023
Taxpayers will save about Sh3.6 billion every year following the proposal to reduce Railway Development levies contained in the new Finance Bill.
The Treasury projects that collections from the Railway Development Levy (RDL), which is the kitty that aggregates funds for the operation of the standard gauge railway, will fall by Sh3.6 billion in each of the next two financial years if proposals in the Finance Bill 2023 sail through public participation and Parliament in their current form.
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The Finance Bill 2023 proposes to amend Section 8 of the Miscellaneous Fees and Levies Act of 2016, by reducing Railway Development Levy (RDL) from two percent to 1.5 percent, one of the proposals that President William Ruto has touted as a key pillar in the latest tax proposals that aim at enhancing the operating environment for businesses.
“I have said yes, we are going to increase Value Added Tax on fuel by 8 percent which will give us about Sh50 billion to deal with the challenge of roads across the country. To balance it out, I have removed Railway Development Levy and Import Declaration Fee,” President Ruto said while addressing a joint media interview on Sunday evening.
According to data from the National Treasury, collections from RDL are now projected to decline by Sh3.6 billion from Sh36.8 billion in the current financial year to Sh33.2 billion in 2023/24.
In the current financial year, collections generated through RDL were first set at Sh35.1 billion before being revised upward to Sh36.8 billion in the Supplementary Budget.
Between 2020/21 and 2022/23, collections generated through RDL have grown by 29.2 percent from Sh28.5 billion.
The Miscellaneous Fees and Levies Act of 2016 provides for the establishment of a fund into, which proceeds from RDL shall be paid on all goods imported into the country for home use with the designated purpose being to provide funds for the construction and operation of a standard gauge railway network.
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Data from the National Treasury further reveals that the Finance Bill 2023’s proposal to amend Section 7 of the Miscellaneous Fees and Levies Act of 2016 to reduce the Import Declaration Fee (IDF) from 3.5 percent to 2.5 per cent is expected to see the Exchequer forego Sh1.3 billion with collections projected to decline to Sh52.6 billion in the financial year ending June 2024.