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Losers and gainers as Treasury realigns budget to reality

Treasury Cabinet Secretary Henry Rotich says the measures have been taken due to a projected shortfall of tax revenue due to the amendments in the finance Bill 2018/FILE

NAIROBI, Kenya, Sept 19 – The National Treasury has released a supplementary budget that contains downward revision of allocation across all arms of government with few departments left untouched.

In total, the National Treasury has reduced the 2018/2019 budget by Sh55 billion which is 1.8 percent of the original budget of Sh3 trillion while at the same time banking on new tax measures to boost revenue.

Development expenditure is the hardest hit with an adjustment of Sh642 billion from Sh677 billion while County governments will receive Sh9 billion less from the Sh314b that had been allocated initially.

Recurrent expenditure, which includes compensation of employees, has been slashed by 5.1 percent from Sh1.07 trillion to Sh1.06 trillion.

National Treasury Cabinet Secretary Henry Rotich says the benefits and allowances remains high, contrary to the Government’s medium-term plan that aims to limit salaries and benefits to a maximum of 35 percent of the National Government equitable share of revenue raised nationally.

However, he says, “the Government recognizes that the fiscal stance it takes today will have implications into the future.”

National Treasury Cabinet Secretary Henry Rotich says the measures have been taken due to a projected shortfall of tax revenue due to the amendments in the finance Bill 2018 approved by parliament.

While rejecting the Finance Bill, President Uhuru Kenyatta said the government would facilitate bodies directly involved in fighting corruption.

Among the allocations that have survived Treasury’s guillotine include the Judiciary (Sh14.4bn), Ethics and Anti-Corruption Commission (Sh2.9bn), the National Intelligence Service (Sh31.2bn) and the Office of the Director of Public Prosecutions (Sh2.9bn).

Rotich, on the hand, has chopped infrastructure budget by Sh8.7bn, while also reducing his ministry’s proposed allocation from Sh36bn to Sh32.5b.

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State departments handling Kenyatta’s Big Four Agenda have also been affected. Ministry of Health and Housing have Sh22 million and Sh79 million sliced from their budgets respectively.

The supplementary budget is in line with the President’s memo to parliament that has recommended amendments to the Finance Bill to increase revenue.

Some of the tax recommendations the President has sent to parliament, in addition to an 8pc VAT on petroleum products, are motor vehicle duty of between 20 and 30pc, a levy on sugar confectionery and increase in duty on mobile and internet data services from 10pc to 15pc.

Kenyatta has also suggested an increase in the excise duty on mobile money transfer from 10pc to 20pc.

The Housing Development Fund tax to be paid by the employees has been revisited and increased to 1.5pc and employer at 1.5pc of the monthly basic salary with a penalty of 5 percent for employers who fails to submit the contributions

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