Economy
Reducing rail fares saves taxpayers Sh3.6 billion
Friday, May 19, 2023
A freight train at the port of Mombasa. file image | NMG
Taxpayers will save about Sh3.6 billion each year after the railway development fee cut proposed in the new Finance Act.
The Treasury expects collections from the Railway Development Levy (RDL), the fund that raises money to operate the standard gauge railway, to fall by Sh3.6 billion in each of the next two financial years if proposals in the financing of the 2023 Bill sail through public participation and parliament. in its current form.
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The 2023 Finance Bill proposes to amend Section 8 of the Miscellaneous Fees and Levies Act 2016, by lowering the Rail Development Levy (RDL) from 2% to 1.5%, one of the proposals President William Ruto has described as a mainstay in the latest tax proposals aimed at To improve the operating environment for companies.
“I said yes, we will increase value-added tax on fuel by 8 per cent, which will give us about Sh50 billion to deal with the road challenge across the country. To balance that, I have By canceling railway development fees and import declaration fees.
According to National Treasury data, collections from RDL are now expected to drop 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 the RDL were first set at Sh35.1 billion before being revised upwards to Sh36.8 billion in the supplementary budget.
Between 2020/21 and 2022/23, collections created through RDL grew by 29.2 per cent from Sh28.5 billion.
The Miscellaneous Duties and Levies Act 2016 provides for the creation of a fund the proceeds of which will be paid from the RDL on all goods imported into the country for domestic use with the specific purpose of providing funds for the construction and operation of the gauge network rail.
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Data from the National Treasury further reveals that the Finance Act 2023 proposal to amend Section 7 of the Miscellaneous Fees and Levies Act 2016 to reduce Import Declaration Fee (IDF) from 3.5 percent to 2.5 percent, the Treasury is expected to waive Sh1.3 billion with an expectation Collections decreased to 52.6 billion shekels in the fiscal year ending in June 2024.
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