NAIROBI, Kenya, June 12 – Treasury Cabinet Secretary Henry Rotich is expected in Parliament on Thursday afternoon expected to present the Sh1.8 trillion Budget Statement for the 2014/2015 financial year.,
The statement will not only highlight on the budget allocations but more importantly, how the government plans to raise revenues to finance its operations for the year.
There were mixed expectations from Kenyans with some optimistic that the budget would insulate them against the rising cost of living and unemployment.
Those interviewed by Capital FM News said they hoped Rotich would reduce taxes on essential commodities whose prices have been increasing steadily in recent months.
“The VAT is so biting that the cost of living has gone up. So they should come up with measures that will see basic commodities come down,” said a Nairobi resident.
The budget reading also comes against a backdrop of faltering economic prospects triggered by rising insecurity, high cost of living and slow performance of key sectors such as agriculture, tourism and manufacturing.
Economists are however keen to see the tactics the Cabinet Secretary will employ in funding the Sh1.8 trillion budget which is billed to be the largest in the region.
This year’s deficit will be Sh342 billion with the government planning to raise about Sh132 billion from the Euro Bond. This is expected to reduce overdependence on local borrowing which would lead to lower interest rates.
George Maina, Senior Tax Manager at PKF says the government should come up with tax measures that do not oppress Kenyans but rather widen the tax base.
“We would like the Cabinet Secretary to ensure that the tax legislation is updated. I don’t mean just the old laws, even the new VAT Act 2013 needs to be reviewed to remove pressure on the basic commodities,” Maina told Capital Business.
He says Kenya should borrow from Tanzania which has recently presented its VAT Bill which isolated key commodities from taxation.
On the Tourism sector, Maina calls on the need to remove VAT on some of the tourist services so as to promote the sector which has been recently affected by travel advisories.
“It is prudent that the government comes up with measures that will encourage the growth of this sector so that we are able to remain in competition especially with our neighbors Uganda and Tanzania,” he says.