The overall expenditure and net lending for FY 2016/17 will be KES 2,264.8 billion, about 30.6 percent of GDP. Estimated revenue collection is KES 1,295.4 billion or 19.7 percent of GDP by end of June 2016. As a result there is a financing gap of KES 691.5 billion.
Even as the government explores options to raise the deficit, with the options being introduction of new taxes, domestic or foreign borrowing, below is a highlight on the gains and fall backs of 2016/17 budget.
PRICES OF STOVES GAS COOKERS AND LPG SET TO GO DOWN
Treasury has reduced the import duty on energy efficient stoves with similar stoves and cookers that use gas, electricity and other fuels from 25% to 10%.
Better still the CS seeks to propose to amend the VAT Act in order to exempt liquefied petroleum gas from payment of VAT.
“This will give Kenyans access to clean, safe and efficient household energy, protect forest cover and reduce premature deaths.” He said.
KSh 124.04 billion allocated to Defence and National Intelligence Service (NIS), and KSh 140.6 billion to the State Departments of Interior and Coordination of National Government.
“This significant increase in allocations will go towards: Military and Police Modernization; Lease financing of police motor vehicles; enhanced security operations; Police and Prison Officers Medical Insurance Scheme; Construction and Equipping of the National Forensic Laboratory; Construction of Police Stations and Housing; and to securing our borders, among others,” said Rotich.
The Ethics and Anti-Corruption Commission (EACC) gets an allocation of ksh 2.8 billion.
The Department of Public Prosecutions (DPP), (KSh 2.1 billion) and KSh 300 million to the Financial Reporting Centre (FRC)
Mumias Sugar Company
The Government has allocated Ksh 2.0 billion in this financial year in order to support the revival of the company.
“The Government recognizes the importance of a financially strong to the economy of Western Kenya,” said the CS.
The Standard Gauge Railway (SGR)
The SGR, which is said to be now over 80 percent complete, has been allocated KSh 154.4 billion whereas (KSh 118.2 billion is external financing from China and KSh 36.2 billion from the government).
To fund specific interventions in the energy sector, the government has in the FY 2016/17allocated KSh 120.2 billion (KSh 81.6 billion is from our development partners and KSh 38.5 billion is GOK.
The cash is expected to cater for: Geothermal Development; Power Transmission; Rural Electrification Programme; Last Mile Connectivity; National Street lighting Programme; Electrification of Public Facilities; Exploration and Distribution of Oil and Gas; Installation of Transformers in Constituencies; Connectivity Subsidy, and LPG Distribution and Infrastructure Programme.
Treasury has set aside KSh 4.9 billion to subsidize fertilizer and seeds and an additional KSh 1.6 billion for Strategic Food Reserves.
KSh 4.5 billion for tourism promotion activities, in addition to some tax incentives.
The free maternal Healthcare, introduced by the government in 2013 has been allocated KSh 4.3 billion with an additional KSh 4.5 billion for support and Lease of medical equipment.
The Independent Electoral and Boundaries Commission (IEBC), has been allocated KSh 19.7 billion for the preparations of the forthcoming General Elections. The Parliamentary Service Commission and to the Judiciary have been allocated Ksh 28.4 billion and Ksh 15.8 billion, respectively.
LOOSERS OF THE 2016/2017 BUDGET
THE INFORMAL SECTOR WILL SOON BE PAYING TAX.
The informal sector, which has been exempted from tax, will soon be paying taxes.
“I have asked the Kenya Revenue Authority explore ways of taxing the informal sector and to redouble their efforts in netting tax evaders. Indeed, Mr. Speaker, if everybody pays their fair share of taxes, we would be in a better position to lower tax rates. As part of the review of the income tax, we are considering to introduce a presumptive tax for the hard-to-tax segment of our people including those in the informal sector,” said Rotich.
INTRODUCTION OF EXCERCISE DUTY ON KEROSENE
Rotich has proposed to re- introduce excise duty on kerosene at KSh 7,205 per 1000 litres due to increased adulteration of fuel in the country following the removal of excise duty in kerosene in 2011.
PRICES OF SMALL CARS SET TO GO DOWN
The CS also seeks to amend the Excise Duty Act, 2015, which had seen prices of small cars hike by almost sh 200, 000, to remove specific rate of duty and introduce advalorem rate of 20% based on the value of the vehicle in order to enhance Equity and Fairness in the Tax System and Tax Administration.
“Mr. Speaker, last year I introduced excise duty on motor vehicles based on the age of the vehicles at a specific rate. This has been perceived to be unfair, inequitable and punitive to importers of vehicles commonly imported by low income earners but beneficial to importers of luxurious vehicles,” Rotich said.
PRICES Of COSMETICS AND BEAUTY PRODUCTS TO HIKE
The cost of beauty is set to rise following Rotich’s proposal to introduce a 10%excise duty on cosmetics and beauty products.
“I also expect that other excise duties take effect beginning July 1, 2016 as provided for by the law” he said.
VIOLATORS OF THE BANKING ACT TO PAY HIGHER FINES
If amended, the monetary penalty for violation of the Banking Act or the Prudential Guidelines will be KSh 20.0 million up from the current KSh 5.0 million. There will also be additional penalties for each day that the violation continues.