Kathiani Member of Parliament Robert Mbui raised concerns about Treasury Cabinet Secretary John Mbadi’s proposal to reintroduce the Eco-Levy, a tax measure initially included in the repealed Finance Bill 2024. Mbui, during an interview on Daybreak, warned that reintroducing this levy could exacerbate the economic challenges faced by Kenyans, particularly amid rising living costs and economic pressures.
CS Mbadi’s proposal to bring back the Eco-Levy, which targets environmentally harmful products, has ignited significant debate. The Eco-Levy aims to impose additional taxes on products such as technological gadgets, telecommunication equipment, and plastic packaging materials. However, the proposal has been met with skepticism, particularly from MP Mbui, who believes that it could further strain the economy.
The Eco-Levy is designed to address environmental concerns by taxing products that have a negative impact on the environment. CS Mbadi, while advocating for the levy, has assured that sensitive items like sanitary pads would be exempted from the tax to mitigate its impact on essential goods. Despite this concession, Mbui remains critical of the measure, arguing that it could disproportionately affect businesses and consumers alike.
During the handover from former CS Njuguna Ndung’u, who had previously criticized higher taxes as a means to increase revenue, Mbui echoed the former CS’s sentiments. Ndung’u had warned that raising taxes does not necessarily lead to higher revenue, a point Mbui underscored in his remarks. Mbui’s criticism highlights a fundamental disagreement on the effectiveness of tax increases in addressing fiscal deficits and supporting economic growth.
Mbui articulated his concerns by referencing basic economic principles, particularly the law of comparative advantage. He argued that Kenya should focus on producing goods and services where it has a competitive edge, while importing other products to balance trade and economic activities. This approach, he suggests, would be more beneficial than imposing additional taxes on products that could hinder business operations and increase costs for consumers.
The MP emphasized that the reintroduction of the Eco-Levy could exacerbate the existing economic challenges by increasing the cost of living and putting additional pressure on businesses. He highlighted the need for a balanced approach to taxation that considers both environmental goals and the economic well-being of the population. According to Mbui, the focus should be on creating policies that support economic stability and growth without placing undue burdens on businesses and consumers.
CS Mbadi’s plan to reintroduce 47 amendments to the Finance Bill, including the Eco-Levy, is part of an effort to raise Ksh. 150 billion to address the deficit resulting from the previous bill’s withdrawal. While the Eco-Levy is a significant component of this plan, the removal of the ban on sanitary pads and other sensitive items is seen as a concession to address public concerns about the tax’s impact on essential goods.
The debate surrounding the Eco-Levy reflects broader discussions about the role of taxation in economic policy. Critics argue that higher taxes may not always translate to increased revenue and could instead exacerbate economic difficulties for businesses and individuals. Proponents, however, believe that such measures are necessary to address environmental issues and support government revenue needs.
As the discussion continues, the effectiveness and impact of the Eco-Levy will remain a key topic of interest. The proposal’s success will depend on its ability to balance environmental goals with economic realities, ensuring that it supports both fiscal stability and the well-being of Kenyans.
