The tax increment was proposed in a memo to Parliament by the President, rejecting the proposed Finance Bill and emphasizing the need for short-term pain to achieve long-term gain. The memo read, “Excise duty on fees charged for money transfer services by banks, money transfer agencies and other financial service providers shall be 20% of their excisable value.” The new taxes will translate into higher money transfer costs for mobile money users, expensive data and airtime for consumers, as telcos and banks seek to transfer the extra costs to them. In July of this year, MPesa had already raised its transfer and withdrawal costs by 1-3 shillings across the board. Safaricom warns that higher duty on mobile payments would reverse the gains made on cashless payments and mostly hurt the poor, most of whom do not have bank accounts and rely on mobile cash transfer services. The President is targeting products such as M-Pesa, which are consumed by a vast majority of Kenyans in an attempt spread the burden of taxation. This new proposal comes just days after Safaricom introduced cheaper data packages.
