Yatani’s budget fails to relieve Kenyans’ pain


Yatani's budget fails to relieve Kenyans' pain

In Summary

  • While many Kenyans held expectations that the Minster would likely address the runaway cost of living, this did not materialize.
  • Instead, ordinary Mwananchi has been slapped with new taxes as the government chases down Ksh.8.7 billion in new tax yields to plug the financing gap.
  • Among the top concerns by Kenyans, as sampled by Citizen Digital is high fuel costs which are scheduled to break yet another ceiling next week as global oil prices swell again. Fuel prices are already trading at their highest point ever in history fueling a sharp increase in basic consumer prices.

Treasury Cabinet Secretary Ukur Yatani has failed to offer a much needed dose of relief to Kenyans in his budget statement to the nation.

While many Kenyans held expectations that the Minster would likely address the runaway cost of living, this did not materialize.

Instead, ordinary Mwananchi has been slapped with new taxes as the government chases down Ksh.8.7 billion in new tax yields to plug the financing gap.

While no new-income taxes were introduced, proposals changing the VAT classification of bread and raising duty on motorcycles imports are expected to hit Kenyans further.

According to economist Tony Watima, the government, in its estimates does not appear keen on mending challenges confronting the ordinary citizen particularly from the fall out of the COVID-19 pandemic.

“We are seeing a very small allocation in terms of vaccines and on the public health response. This doesn’t give a good indicator on what the government is looking at in terms of getting out of the pandemic problem that also presents an economic issue,” he stated.

On his part, while the budget includes a number of remedies on taxation, Head of Research at Genghis Capital Churchill Ogutu argues there are no real gainers from Thursday’s budget statement.

“I don’t see any winners given the nature of new tax proposals. I have not seen any new measures alleviating pain on Mwananchi,” he said.

Watima warns the government has persistently piled up taxation on Kenyans in a seemingly disillusionment of contributors to sustainable economic growth.

“This is a budget that chokes already suffocating Kenyans. The truth is you can’t improve the economy by slapping more taxes on Mwananchi,” he added.

Among the top concerns by Kenyans, as sampled by Citizen Digital is high fuel costs which are scheduled to break yet another ceiling next week as global oil prices swell again.

Fuel prices are already trading at their highest point ever in history fueling a sharp increase in basic consumer prices.

The rate of inflation at the end of May stood at 5.9 per cent, the joint highest rate since April last year.

To cushion Kenyans and the economy against the devastation of the pandemic, Treasury has proposed the allocation of just Ksh.23.1 billion as a post COVID-19 economic stimulus program (ESP).

The new cushioning is nevertheless merely 0.2 per cent of Gross Domestic Product (GDP).

At the same time, the government continues to choke the economy with unpaid arrears to suppliers who are mostly small businesses.

According to data from the third quarter budget and economic review outlook paper, the national government owed a hefty Ksh.307.8 billion to suppliers at the end of March 2021.

While Treasury has directed both government agencies and Counties to clear all verified arrears by June 30, the entities have persistently failed to honor similar directives in the past.

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