Faced with the mammoth task of financing the ambitious Ksh3.02 trillion budget for the financial year 2019/2020 headlined by a Ksh670 billion deficit, Treasury Cabinet Secretary Henry Rotich has imposed more taxes on leisure spending and proposed to cut down on non-essential spending in government.
Presenting the budget at the floor of the National Assembly on Thursday, Rotich resisted the urge of imposing Value Added Tax (VAT) on goods thus easing on the already overburdened Kenyan and instead made proposals that are likely to cushion the normal man from the tough economic times the country finds itself in.
CS Rotich also announced that the deficit will be financed by Ksh324 billion external debt and Ksh283.5 billion domestic borrowing.
The Cabinet Secretary’s speech featured a variety of measures that the government will be undertaking to meet its needs including imposing a 10% excise duty on betting stakes and more taxes on alcoholic drinks and cigarettes.
“This budget responds to the social-economic needs of Kenyans. I believe that this budget will lay a strong foundation for the Big Four,” said Rotich.
CS Rotich also proposed an increment in Capital Gains Tax from the current 5% to 12.5%.
Allocations
Rotich aligned his budget to suit President Uhuru Kenyatta’s Big Four Agenda with Ksh450.6 billion being set aside to finance the Head of State’s legacy action plan, from the kitty Ksh10.5 billion has been set aside for the housing pillar while 47.8 billion has been set aside for the health pillar of the Big Four.
Conversely, Ksh671 billion has been set aside for development projects with the government under pressure to deliver before President Kenyatta leaves office in 2022.
With Senators and MPs still in a deadlock over funds to be allocated to the counties, Rotich has proposed Ksh314 billion to be channeled to the devolved units.
{Read: New high for liquor and cigarettes in the new budget}
The country’s security machinery has been allocated Ksh396 billion with the Minsitry of Interior and Coordination of National Government being allocated Ksh140 billion and Directorate of Criminal Investigations (DCI) Ksh 37.7 billion.
The Office of the Director of Public Prosecutions (ODPP) got Ksh3 billion while the Ethics and Anti Corruption Comission (EACC) was allocated Ksh2 billion.
Education has been the biggest winner of the sector with free secondary education being allocated Ksh55.4 billion, free primary education Ksh13.4 billion, Ksh3.2 billion hiring of more teachers and Ksh4 billion for National Hospital Insuarance Fund (NHIF) insuarance for secondary school students.
Parliament has been allocated Ksh40.5 billion while the Judiciary has been allocated Ksh19.4 billion.
Ksh55.5 billion will go towards servicing part of the loan advanced to the country by the Chinese government to construct Phase 2A Standard Gauge Railway (SGR) railway from Nairobi to Naivasha.
The CS pointed out that the government will be taking steps to ensure that the government manages the country’s mammoth Ksh5.4 trillion debt effectively.
{See also: Ksh3.02 trillion budget presents headache for Rotich}
Rotich also announced a raft of austerity measures that the government plans to undertake including rolling out fuel cards for all civil servants, cutting down on leasing office space and cleansing the wage bill to weed out ghost workers.
Further, the CS also proposed to reduce the VAT on withholding tax from 6% to 2% in the wake of increased refund demands that the KRA has been forced to contend with.
