Reduced railway Levy saves the Public Sh3.6 billion

Following the proposal to lower Railway Development levies contained in the new Finance Bill, taxpayers will save about Sh3.6 billion annually.

If the proposals in the Finance Bill 2023 are approved by Parliament and the public in their current form, the Treasury projects that revenue from the Railway Development Levy (RDL), the fund that collects money for running the standard gauge railroad, will drop by Sh3.6 billion in each of the next two fiscal years.

One of the proposals that President William Ruto has hailed as a key pillar in the most recent tax proposals that aim to improve the operating environment for businesses is to reduce the Railway Development Levy (RDL) from two percent to 1.5 percent. This change is proposed in Section 8 of the Miscellaneous Fees and Levies Act of 2016 and is included in the Finance Bill 2023.

“I have said yes, we are going to increase Value Added Tax on fuel by 8 percent which will give us about Sh50 billion to deal with the challenge of roads across the country. To balance it out, I have removed Railway Development Levy and Import Declaration Fee,” President Ruto said while addressing a joint media interview on Sunday evening.

RDL revenue is now anticipated to decrease by Sh3.6 billion from Sh36.8 billion in the current fiscal year to Sh33.2 billion in 2023/24, according to data from the National Treasury.

The amount of revenue received through RDL for the current fiscal year was initially estimated at Sh35.1 billion before being increased to Sh36.8 billion in the Supplementary Budget.

Between 2020/21 and 2022/23, RDL-generated revenue increased from Sh28.5 billion by 29.2%.

The Miscellaneous Fees and Levies Act of 2016 establishes a fund into which RDL proceeds on all goods imported into the nation for domestic use shall be paid, with the fund’s designated purpose being to raise money for the building and running of a standard gauge railway network.

Data from the National Treasury also shows that the Exchequer will lose out on Sh1.3 billion as a result of the Finance Bill 2023’s proposal to change Section 7 of the Miscellaneous Fees and Levies Act of 2016 to reduce the Import Declaration Fee (IDF) from 3.5 percent to 2.5 percent, with collections expected to fall to Sh52.6 billion in the fiscal year ending June 2024.