NAIROBI, Kenya, Jun 8 – Economic experts have termed the Sh2.3 trillion budget for the 2016/2017 financial year as expansionary and favours the common Kenyan.
ABC Capital, Corporate Finance and Advisory Manager Johnson Nderi says the expected spending is focused on boosting economic growth.
“The government still sees itself as central to economic growth although there are areas where they have shown concession that the private sector can do it better when they talk about Public Private Partnerships (PPPs),” Nderi told Capital FM Business in an interview.
He says there was also a lot of “government giveth, government taketh.”
“This is seen in the areas of steel and iron imports that will pay more taxes while for aluminium imports, importers will pay less taxes,” he said.
In considering the common Kenyan, PKF Assistant Tax Manager Ruth Njoroge highlighted the introduction of a minimum taxable rent income of Sh12,000 per month, reduction of the import duty on stoves from 25 percent to 10 percent as well as exempt of exempt liquefied petroleum gas from payment of VAT.
“These measures consider the common ‘mwananchi’ and are also good for the economy. The Cabinet Secretary Henry Rotich said he received comments from ‘Wanjiku’ which he seems to have delivered,” she said.
She also highlighted the exempt of VAT of bonuses and overtime paid to low income earners.
“Other major highlights include the excise duty on motor vehicles that has gone back to 20 percent on the value of the vehicle,” she explained.
The tourism sector according to Njoroge got most benefits with numerous tax exemptions.
Among exemptions from VAT include fees charged into the national parks and commissions earned by tour operators.
On the introduced tax measures, will the Kenya Revenue Authority (KRA) raise the Sh1.3 trillion revenue?
“That remains to be seen, as some areas where taxes have been raised, economic activity will come down and in some areas the tax raise might not have any effect,” Nderi explained adding that the government has tried to strike a balance.
However, Njoroge is hopeful. “The government has proposed to target the informal sector in paying taxes, introduction of the Presumptive Income Tax (PIT), the amnesty to taxpayers who own assets and businesses outside the country and are willing to reinvest back home as well as widening the tax base, the can deliver,” she explained.
Another highlight noted by the analysts was that the usual alcohol and cigarettes that always get higher taxes every year, are safe.