Two days after the president William Ruto’s administration tabled its first Sh3.6 trillion budget, Kenyans are yet to come to terms with the proposed new tax regime at a time the country is experiencing harsh economic times and a rising cost of living coupled with the pressure from maturing public debts.
Treasury Cabinet Secretary Prof Njuguna Ndung’u said the ambitious spending plan has been a delicate balancing act as the government seeks to unlock new revenue avenues to meet its obligations.
In this fiscal year’s budget, the Executive will receive the bulk of the allocation at Sh2.16 trillion. This comprises ministries, departments and state agencies.
Parliament, which comprises National Assembly and Senate, will receive a total of Sh40.4 billion.
The Judiciary is the arm of government which has been allocated the least amount of money at Sh22.99 billion.
To promote devolution, the Treasury has allocated Sh385.4 billion to the 47 counties as part of the shareable revenue.
Other expenditure items will be what is known as the Consolidated Fund Services (CFS). CFS has been allocated a total of Sh1.836 trillion, taking the total spending in the financial year 2023/24 to Sh4.45 trillion
The biggest shock has been a crippling drought, the worst in 40 years. The drought has depressed harvests and pushed up food prices, with inflation rate remaining outside of the upper bound target of 7.5 percent for the last 12 months to June.
Only 26,676 employees, who constitute 0.8 percent of total employed workers in the country, to be affected by the newly introduced top tax bands of 32.5 percent and 35 percent targeting those earning above Sh500,000 per month.
Treasury proposes the introduction of a 15 percent excise duty rate of excisable value of fees charged on advertisement by all televisions, print media, billboards, and radio stations in promotion of alcohol, gaming, lottery and price competition.
Gambling and alcohol users are to be hit hard following a new tax hike on their pastimes. “Consumption of alcohol, betting, gaming, lottery and price competition are extremely addictive and result in harmful repercussions in the society especially the youth.” The CS said.
President William Ruto’s government will spend an additional Sh300 billion in the financial year 2023/2024, as it seeks to realize the bottom-up economic model.
The Kenya Kwanza administration budget has increased from Sh3.3 trillion in the 2022/2023 FY to Sh3.6 billion this financial year.