Parliament resumes sitting today where it is expected to discuss the troubled Finance Bill that is long overdue, among other crucial bills.

The Finance Bill which contains the amended VAT bill has proposals by several members of the August house to cap interest rates on loans and remove the 12% VAT rate. The move to scrap the lower VAT rate could come as bitter sweet news as taxes on essential commodities such as cooking gas (LPG) will not be charged VAT. This could see a drop in the price of cooking gas even at times when petroleum fuels at the pump are on the rise.

However, several items that had been initially charged on the 12% VAT rate will now attract the upper bar 16% VAT rate. Three VAT rates existed in the old arrangement, the higher 16%, lower 12% rate and the 0% rate.

The proposal to cap interest charged on loans and putting a base on interest given to interest earning deposits has been strongly resisted by commercial banks. Banks currently charge interest rates of between 19% and 25% on loans and a mere single digit rates on deposits.