NCBA Group Managing Director John Gachora has warned of the adverse effects the controversial Finance Bill 2024 will have on the banking sector and financial inclusion, if not amended by MPs.

In a series of tweets on X, Gachora faulted the introduction in the bill of the Tobin Tax and Robinhood Tax, through the elimination of VAT exemptions on banking transactions, saying they will make bank transactions costlier.

“Finance Bill 2024: A curious introduction of both Tobin Tax and Robinhood Tax through the scrapping of VAT exemptions for banking transactions. It will make basic banking expensive, raise cost of credit, and drive people to the black market," noted Gachora.

Gachora, who is the Kenyan Bankers Association (KBA) Governing Council Chair, warned that the proposed taxes could jeopardize Kenya’s prominent position globally in driving financial inclusion.

“Kenya has been a leading light in financial inclusion globally. A unnecessary tax on banking transactions will make us uncompetitive. Large FX transactions will be offshored. Completely unnecessary!" the banker asserted.

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The NCBA Group MD further called on members of parliament to seriously reconsider the bill, urging them to maintain Kenya's leadership in banking and finance by rejecting the proposed taxes.

"Urging our MPs to do the right thing. Keep Kenya a leading light when it comes to banking and finance - reject this attempt to tax you for simple act of paying for goods and services,” he urged.

Even as he called for a revision of the controversial taxes in the Finance Bill 2024, which has caused wide public outrage, he appealed to Kenyans to pay their taxes as it is their civic duty.

The Finance Bill 2024, which seeks to introduce or increase a raft of taxes to enable President William Ruto’s government to meets all its financial obligations during the 2024-2025 fiscal year.

KBA says the new proposal will see listed financial services attract a 16 per cent VAT charge if the Finance Bill 2024 is adopted, further burdening the already strained bank customer.

The Bill proposes VAT on money orders, foreign exchange (forex), credit card issuance, telegraphic transfers, and cheque processing transactions, which were exempt previously.

The controversial finance bill, which is before Parliament, is further proposing to increase the excise duty charged on financial services to 20 per cent from the current 15 per cent.

“For example, if a bank charges a customer Sh100 for money transfer, the Bill proposes an additional Sh39.20 to be paid by the customer to cater for taxes (excise duty at 20 per cent and VAT at 16 per cent) bringing the total cost to Sh 139.20,” said KBA CEO Raimond Molenje.

KBA warns that this might force customers to transact in cash outside local financial systems hence costing the government huge tax losses and banks billions in badly-needed revenue.

“We urge the National Assembly to reconsider these proposals and maintain the current status of exempting financial services from VAT and sustaining the 15 per cent Excise Duty,” Molenje added.

The Finance Bill 2024 is currently before the National Assembly Committee on Finance and National Planning chaired by Kimani Kuria and has invited public input on its provisions.