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Liquor and cigarettes heavily taxed in new budget

The National Treasury has also proposed a 30 to 35 excise duty on high end vehicles/FILE

NAIROBI, Kenya, Jun 13 – The government is set to raise excise duty on cigarettes, wines and spirits by fifteen per cent in part of newly proposed tax measures aimed at mobilizing resources for the Sh 3.02 trillion 2019/20 budget  unveiled on Thursday.

Treasury Cabinet Secretary Henry Rotich said a 750 ml wine bottle will cost Sh 18 above the current rate with cigarette costs set to rise by Sh 8.

“Excise duty on a 750 ml wine bottle will be Sh 136. The duty of a bottle of whisky will go up by Sh 24 to Sh 182 for a 750 ml bottle while a packet of cigarettes will go up to Sh 61,” he said.

The National Treasury has also proposed a 30 to 35 per cent excise duty rate on high end vehicles with the rate for 1500 cc engine cars set to vary between 20 and 25 per cent.

The excise duty on vehicles powered by electricity will be reduced by 10 per cent in a bid to encourage the use of environmental friendly automobiles.

Ministries under which the Big Four Agenda will be executed are among key beneficiaries of the budget with priority areas listed in the development blueprint set to be funded to the tune of Sh 450 billion according to the spending plan outlined by Rotich when he presented the budget at the National Assembly Thursday evening.

The allocation represents 14.6 per cent of the Sh 3.02 trillion budget.

The implementation of agriculture, manufacturing, universal health and affordable housing projects will  cost the government Sh55.77 billion, Sh125.4 billion Sh82.8 billion and Sh103.2 billion in the medium term.

National government spending has been capped at Sh 1.8 trillion with Parliament  and Judiciary set to receive Sh43.8 billion and Sh18.9 billion respectively.

County governments have been allocated Sh372.6 billion with Sh5.8 billion set to be channelled to the Equalization Fund.

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The National Treasury pledged to undertake radical reforms in a bid to tame the rising public wage bill and reduce pension budget which has recorded a threefold increase in the last decade as part of efforts to reduce public spending.

Rotich indicated the government had embarked on a process of revalidating some 270,000 pensioners whose monthly dues will cost exchequer Sh86 billion in the current financial year up from Sh25 billion in the 2008/09 fiscal year.

“The increase in the pension budget over the years is unsustainable. Between February and May we conducted a payroll cleansing exercise for pensioners to authenticate recipients of monthly pension payments,” Rotich outlined.

Other measures instituted by the National Treasury include the restriction of public service hiring and the cleaning up of ghost workers from the public service wage bill which accounts for a significant portion of the national governments Sh1.8 trillion allocation in the Sh3.02 trillion 2019/22 financial year budget.

“In order to contain the wage bill I propose that we limit strictly the extension of services for the significant number of civil servants who are retiring at the age of 60. We will restrict new recruitment to key technical staff, security personnel and health workers,” the Treasury CS pointed out.

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