Budget Kenyan’s Burden, Looters’ Paradise

The government un-veiled its Kshs. 2.3 trillion 2016/2017 national budget the highest that the country has ever been saddled with since independence as Kenyans continue reeling from high food and beverage prices.

Even as cabinet secretary Henry Rotich was unveiling this year’s budgetary proposals in parliament outlining the proposed government expenditures in the coming financial year, some characters were laying down elaborate schemes on how they will loot this money.

On the other hand the honest ordinary hard working millions are only worried on how this is going to burden them down through heavy taxation that leads to the very high prices the country’s citizenry are experiencing in purchasing foods and beverages.

The government the highest spender anywhere in the world heavily depends on taxing its citizenry to raise the money outlined in the proposals to meet the set demands or proposed expenditures in the same

Mr. Henry Rotich-Finance CS
Mr. Henry Rotich-Finance CS

mostly on government services and projects.

The previous year Mr. Rotich’s budgetary proposals had cleared the Kshs. 1.8 trillion mark, higher than the previous year’s at Kshs. 1.6 trillion the retired President Mwai Kibaki’s administration having history with one of his last budgets bridging the trillion and it is still spiraling annually.

The reason why ordinary Kenyans are always wary of the annual budgetary rituals is the fact that they must always dig deeper in their pockets to pay for the government’s increased myriad tax regimes the most notorious being the income tax, the Value Added Tax (VAT), Road Levy among many others.

This squarely brings the Kenya Revenue Authority (KRA) into focus because it is expected to collect and remit to the government the highest percentages of these monies mentioned in Mr. Rotich’s proposals to finance the government expenditures and with that the big time multi-million even billion shillings tax evaders in collaboration with KRA officials in most cases.

In this year’s budget areas that came out screaming under increased tax regimes were particularly Kerosene and cosmetics or beauty products among many others, but these specifically because they directly touch on millions of Kenyans particularly in the rural areas – kerosene is not only for cooking but lighting up houses since electricity coverage is extremely dismal and millions of households cannot afford it.

Therefore slapping tax on Kerosene at a time when the global crude oil prices are at their lowest ebb is hitting the common man hard below the belt because whichever way there virtually no household in rural Kenya including the cities that does not directly depend on the fuel for both the mentioned purposes.

The argument the Cabinet Secretary gave for levying higher taxation particularly on Kerosene is that the action was aimed at stopping rampant adulteration of motor fuels by un-scrupulous traders seeking to make more money from motorists by using Kerosene in the adulteration processes.

Treasury Cabinet Secretary Henry Rotich said: “The removal of excise duty on kerosene in 2011 was intended to cushion low-income earners against high prices of this petroleum product. However, the removal of the tax has since resulted in increased adulteration of fuel in the country.

“This has denied the oil marketers business in the neighbouring countries in addition to giving them a bad reputation. In addition, adulteration negatively impacts car engines and increases their maintenance costs. In order to discourage this harmful practice, I propose to introduce excise duty on kerosene at Sh7, 205 per 1000 litres.”

This was near sighted because even it succeeds in preventing these illegal activities, the consequences are going to be punitive on the consumers of the product as the government goes all the way to the Central Bank of Kenya smiling from the hundreds of millions of shillings it will have raked in.

Perhaps increased taxation levels is long overdue in Kenya since these are just luxuries that millions can do away with but have become addicted to like smokers to cigarettes usually with devastating consequences. Indeed most these products are imported with our country’s women being the biggest consumers.

Indeed apart from that wide areas of the economy were saddled with new taxes while others were given a soft landing, but the end result is that all these trillions must go to government expenditure most which were outlined during the budget reading in parliament.

Perhaps one of the most critical factors the minister endeavoured to factor in the proposals is to widen the revenue or tax base for the government where many avenues or more targets for taxation are set to collect the desired revenue for the government.

The most glaring is the roping of the usually dreaded landlords to pay taxation on the billions of shillings they rake from tenants every month in paid up rents, the highest and most notorious being in Nairobi.

t has since emerged that as the landlords were evading paying rental taxes, they were instead pushing them to their tenants to carry the burden, however this time round KRA seems to have out with a fool proof scheme where they will have to pay up or face the taxman’s ire.

The government monetary allocations to all sectors of the economy are supposed to spur development, complete the existing development projects as others are triggered into life in various parts of the country.

This year’s budget analysis reads total spending for 2016/17 is set to rise to Ksh 2.05 trillion. This reflects more modest ambitions for spending and a desire to reduce the deficit relative to recent years. The government expects to collect Ksh 1.50 trillion in revenue. This will leave a deficit of roughly Ksh 555.4 billion, 6 percent smaller than the revised 2015/16 budgeted deficit.

Infrastructure and energy remains important, but the share of the 2016/17 budget devoted to this sector will dip slightly from 27 to 25 percent. The share of the budget devoted to governance, justice, and law and order will increase from 10 percent to 12 percent in preparation for next year’s general election.

The unconditional transfer of funds to the countries (known as the equitable share) is set to rise by 7.9 percent. This is lower than previous years and far below the 15 percent increase proposed by the Commission on Revenue Allocation (CRA). Treasury has not explained its use of a lower growth rate.

There are also the critical questions of the KRA meeting its targets in annual revenue collections, the country’s annual budget deficits and the accumulated debts both internal and external in trying to balance its expenditures.

KRA is more likely than not to miss its Kshs1.36 trillion collection target, thus rocking the Government’s budgetary boat. Already, there are indications that the taxman is set to miss its target, having collected Kshs. Sh687 billion with just four months to go.

Heavy commercial borrowing Kenya’s total public debt as of December last year stood at Kshs. 3.16 trillion. Most of this debt has been from concessional multilateral lenders such as the World Bank and African Development Bank (AFDB) and bilateral ones from countries like China.

Despite the public being invited to comment on the draft Budget Policy Statement in February, the final statement does not indicate how public input was taken into account or how it influenced the budget. This could imply that input from the public was not satisfactorily considered.

Some of the sectors mentioned to have received higher budgetary allocations in the beginning fiscal year compared to the previous is the security – that is the armed forces, the police forces and related institutions and organizations. The other is agriculture, tourism, education, youth and women development funds among many others.

These are the expenditures where the hyenas, the jackals, the predators, wolves… name them operating in mafia like cartels target to loot the monies in thousands of many different ways in collaboration with public service employees through contracts, tenders and any other real or imaginary loophole where the government has to incur expenditure.

The latest being the National Youth Service (NYS) lost billions of shillings in outright looting by top government officials in collaboration with outsiders owning contract companies which are used to fleece the monies. It goes without saying that the then Cabinet Secretary for devolution Anne Waiguru under immense pressure from the public was forced to resign just like some of her colleagues had earlier been forced to step aside after being implicated in corrupt deals.

 

 

 

 

 

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