Following the recent pay hike for the striking teachers, doctors and nurses, and now the Kenyan member of parliaments who have allocated themselves a send off package of Ksh 9.7 (approximately USD 150,000), taxes on financial transactions are set to be introduced.
The government argument is that it is in no position to get the money to pay the new salaries that were backdated to the July this year, short of asking donors to assist or increase the income tax, hence the decision to introduce a new raft of taxes to meet the now 60 per cent recurrent expenditure (read salaries for civil servants) of the Ksh 1 trillion national budget (USD 11.8 billion).
Kenyans are therefore bracing themselves for the speculated 10 per cent in transaction fee. It is expected that taxes will be implemented per transaction, meaning customers will pay additional costs when using mobile money for money transfers. The new tax is expected to bring Sh4.5 billion (USD 55 million) to the government's coffers, from mobile money transactions alone.
The new move by the government is not good news to Airtel and Yu mobile networks, especially as they started recently aggressively promoting their new money transfer service, where its subscribers were to enjoy free money transfer services to other networks. Safaricom on the other hand will be hit hardest, considering its more than 14 million customers and more than 2 million MPESA transactions daily.
