Jubilee Government unveils a Ksh 1.6 Trillion budget


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National Treasury Cabinet Secretary Henry Rotich unveils Kenya's 2013/14 Budget

Updated Thursday, June 13th 2013 at 17:50 GMT +3 [TABLE="width: 600"]
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[TD] Treasury Cabinet Secretary Henry Rotich with Devolution Secretay Anne Waiguru [Photo:Martin Mukangu/Standard][/TD]
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By Fredrick Obura


NAIROBI, KENYA: The government on Thursday unveiled Sh 1.6 trillion budget under the theme transformation for shared prosperity.

The budget to cover 2013/14 Financial year allocated health Sh34.7 billion, Transport Sh125billion, Energy 78.5 billion, ICT 9.5billion, and Education and Technology Sh130billion.

County governments and the Interior ministry were allocated Sh210billion and Sh108billion respectively.

In his presentation, Henry Rotich the Cabinet Secretary for National Treasury said crime was an issue in the country's economic development and deserved attention to bring down the criminals.

He said out of the Interior ministry's budget, Sh 67billion will be allocated to the police with Sh 4billion channeled to equipment purchase, Sh 3billion will be set aside for leasing of vehicles to make police patrols visible.

The Cabinet Secretary further stated that Sh1.2billion has been set aside for the construction of new housing units for the police and Sh 4billion for crime research.

The budget which is first under President Uhuru Kenyatta's administration set aside Sh8billion under the agriculture budget for irrigation and sh2billion as fund for agribusiness. "We realised that 70 per cent of household budget goes to food, the government is determined to increase food production to reduce expenses on food," he said.

He said alternatives to introduce modern technologies in agriculture and increasing accessibility to farm inputs would be explored.

In the 2013/14 Budget the Judiciary and parliament received Sh16.1billion, and Sh19billion respectively for expansion of programmes.

In the education sector, President Uhuru's government allocated Sh 10.3billion for free primary education, sh2.6billion to school feeding programme, and Sh20.9 to free day secondary education and another sh52billion for laptops, content and capacity development.

Standard Digital News - Kenya : National Treasury Cabinet Secretary Henry Rotich unveils Kenya?s 2013/14 Budget
 
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From left: Treasury PS Joseph Kinyua, Cabinet Secretary Henry Rotich, his Devolution counterpart Anne Waiguru and Investment Secretary Esther Koimet leave Treasury building for Parliament on June 13, 2013. Photo/SALATON NJAU




Kenyans outside Parliament buildings waiting for the National Treasury Cabinet Secretary Henry Rotich to read the budget on June 13, 2013




Members of the National Assembly waiting for Treasury Cabinet Secretary Henry Rotich to read the budget on June 13, 2013.



 
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Cabinet Secretary for Treasury Henry Rotich (centre) reads the 2013/2014 budget in Parliament on June 13, 2013.




Treasury Cabinet Secretary Henry Rotich (left) with Speaker Justin Muturi after budget reading in Parliament on June 13, 2013.




Treasury PS Joseph Kinyua (left) with Othaya MP Mary Wambui after the budget reading in Parliament on June 13, 2013
 
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Health Cabinet Secretary James Wainaina (right) with ICT Cabinet Secretary Fred Matiang’i after the budget reading in Parliament on June 13, 2013.




Treasury Cabinet Secretary Henry Rotich (right), Isiolo Street Families chairman Abdi Galgidele Mohamed (center) and his wife Zainab after the budget reading in Parliament on June 13, 2013. Mr Mohamed was a guest during the ceremony.
 
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Government must resist the temptation to tax an already overtaxed Mwananchi and instead find ways to widen the tax base to net those who are not already being taxed. And there are many of them anyway.
 
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Why Rotich's is a Budget of unpretentious knives

Updated Thursday, June 13th 2013 at 20:32 GMT +3

There was not much promise going into this Budget, especially with the news of the soaring wage bill, except for this year's theme - "Transformation for Shared Prosperity." And so on his first outing, Cabinet Secretary for Finance Henry Rotich did little to assuage our fears.

In fact, his was a
Budget of unpretentious knives and sad reminders. Imposing a 1.5% tax on all imported items to fund railway expansion is sure to hurt even the poorest among us.

Of course he heralded the dawn of a new era - but perhaps more in a political fashion than in the economic sense. In his own words - elevating the economy to a higher and sustainable growth path, creating decent jobs, and significantly reducing poverty while preserving macroeconomic stability - Mr Rotich summarised the dreams of a hopeless nation.

This is a laudable dream whose realisation will take painful sacrifices. Rotich had the presence of mind to draw us to stick with reality - that while we have come a long way, there is still an arduous journey ahead and one that we must face and deal with.

Strategic interventions are planned to ensure we create one million jobs a year. Of course the proof of the pudding will be in the eating! While we as a nation are strategically placed to exploit the future, there is need to stay focused. It is one thing to say we will create jobs, but actually getting there takes not just political goodwill but planning.

Within this tight envelope, the Finance Secretary acknowledged that the private sector has a large role to play in our future. What will liberate this sector, however, is an environment free from corruption, red tape, and low energy costs.
Specific infrastructure projects were in his sight with generous allocations. This is sure to change the face of Kenya as an investment destination. This, however, is not all.

Security issues
The ease of doing business must be addressed and while it was mentioned, a lot of it is was what we had heard before. One hopes that this time they really mean business and something will happen.

Security was given special mention and this specifically is a good thing. Investors and business in general tend to stay away when there are major security issues. In particular, one of the backbones of our economy, tourism, is significantly affected due to security concerns.

Perhaps the most notable thing about this
Budget is an allocation to irrigation - which in the long term, should contribute to the country's food security.
Perhaps what wasn't planned for but which has an impact on food situation is the climate change. This global phenomenon is going to play a big part in any plans to achieve food security and the earlier we get down to dealing with it, the better for us.

Measures announced including making it easier to register a business, obtaining necessary permits, reforms of the tax system and a new Biashara Kenya Bill aimed at creating a one-stop shop is supposed to be good news, but haven't we been down this road before?

Standard Digital News - Kenya : Why Rotich?s is a Budget of unpretentious knives
 
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Government must resist the temptation to tax an already overtaxed Mwananchi and instead find ways to widen the tax base to net those who are not already being taxed. And there are many of them anyway.
Here you go...

Tax shocker in Cabinet Secretary Henry Rotich's Budget in his bid to fund new rail system

Updated Friday, June 14th 2013 at 20:45 GMT +3

By James Anyanzwa and Macharia Kamau

NAIROBI, KENYA: The phrase tightening of belts will assume a new meaning for Kenyans in the coming months, as the impact of the new tax measures becomes clearer.

It has emerged the tax measures unveiled on Thursday will see increases in the prices of fuel, kerosene, diesel and other essential imported goods. This follows the slapping of a blanket duty on imports by the National Treasury.

The implication of this new levy, hidden in the Budget goodies, dawned on many a day after Cabinet Secretary Henry Rotich presented his first budget statement warning consumers a controversial 16 per cent VAT hike is likely.

Other tax measures included a return of capital gains tax and minor tweaks to customs and excise taxes. The proposed Railway Development Levy, however, comes as a shocker and could have serious implications on consumers, besides having the potential to fuel inflation.

Rotich also proposed to introduce a customs warehouse rent for goods that remain at the port of discharge for a period exceeding 21 days. This could lead to heavier penalties on importers already burdened by clearing and forwarding firms that collude with container depots to delay clearance.

"Some importers have turned the Port into a storage area thus contributing toward congestion of cargo," said Rotich. This could see commodity prices pushed up further in the case of delays in discharging cargo.

Tax experts are raising the red flag on the introduction of the railway levy whose ripple effects, they say, would reverberate in the entire economy. Transportation costs, prices of clothing, motor vehicles, machinery and foodstuffs are expected to rise significantly in the next few months.

Already, consumers are shouldering a heavy burden of road maintenance levy to the tune of Sh3 per litre of fuel. Industry insiders fear that the proposed railway levy could further increase pump prices by Sh2 per litre.

"This (Railway Development Levy) is akin to the road maintenance levy that is already in place," said Steve Okello, Tax Partner at consultancy and auditing firm PricewaterhouseCoopers (PwC). "Its impact in the short-term will be inflation and increase in the prices of goods. There will be a short-term impact but in the long-term, it will be neutralized."

Atul Shah chief executive PKF said: "There will be an element of cost push inflation being triggered by the levy and consumers will bear that cost. In the short-term, inflation will hit us. If the funds are used for railway development, the overall long-term benefit will be a reduction in cost of goods... if 70 per cent of the truck traffic is moved to railway, it will mean a reduction in transportation charges as well as the wear and tear on roads. In the short-term, however, consumers will pay more."

Fuel prices

A fall in fuel prices had pushed down inflation rate to settle at 4.05 per cent in May, up from 4.14 per cent in April, but fears are rife that the proposed levy could re-fuel inflationary pressures and erode households purchasing powers. The situation could be made even worse with the re-introduction of VAT Bill, which proposes to slap a 16 per cent tax on basic commodities, such as unga, milk, sugar and bread.

The cost of farm inputs, including fertiliser, livestock feeds and pesticides will also go up by the same margin. This could lead to an increase in the prices of vegetables, fruits, maize and other farm products. In his budget statement, Rotich said the 1.5 per cent railway development levy, imposed on all imported commodities, is expected to mobilize Sh15 billion for the construction of the Mombasa-Kisumu Standard Gauge Railway line. The three-year project is expected to reduce the cost of freight.

Going by the Petroleum Import Bill of Sh326.9 billion recorded last year (2012), the National Treasury could generate about Sh4.9 billion from importation of crude oil to finance the development of the railway line per year.

Import Bill

The total import Bill for 2012, however, stands at Sh1.4 trillion: This could be the figure Rotich is eyeing in the next financial year with the new levy. The revenue raised could amount to more than Sh21 billion.

"The railway system will be good for the ordinary person, especially in the long-term," says Kariithi Murimi, a risk consultant. "If we can get it to work, the price of goods could significantly come down. For instance, when millers import maize and use the road instead of the rail, the cost incurred using the road is about Sh5 more than if they used rail. This is passed on to consumers. When oil marketers use the road, there is an extra Sh8 per litre of fuel."

The National Treasury is seeking to tap into new sources of revenues to finance the Government's ballooning expenditure needs. Faced with crippling revenue shortfalls, demands for higher pay by public servants, pressure for money from governors and a burgeoning public debt, Mr Rotich is desperate not to stifle the country's growth by cutting his development budget. He is counting on borrowing, support from multinational lenders and expansion.

Although the Secretary for the Treasury has set the domestic borrowing requirement at a fairly low level of Sh106 billion, indications are that the Government will be aggressive in the international market.

Standard Digital News - Kenya : Tax shocker in Cabinet Secretary Henry Rotich?s Budget in his bid to fund new rail system
 
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Here you go...

Tax shocker in Cabinet Secretary Henry Rotich's Budget in his bid to fund new rail system

Updated Friday, June 14th 2013 at 20:45 GMT +3

By James Anyanzwa and Macharia Kamau

NAIROBI, KENYA: The phrase tightening of belts will assume a new meaning for Kenyans in the coming months, as the impact of the new tax measures becomes clearer.

It has emerged the tax measures unveiled on Thursday will see increases in the prices of fuel, kerosene, diesel and other essential imported goods. This follows the slapping of a blanket duty on imports by the National Treasury.

The implication of this new levy, hidden in the Budget goodies, dawned on many a day after Cabinet Secretary Henry Rotich presented his first budget statement warning consumers a controversial 16 per cent VAT hike is likely.

Other tax measures included a return of capital gains tax and minor tweaks to customs and excise taxes. The proposed Railway Development Levy, however, comes as a shocker and could have serious implications on consumers, besides having the potential to fuel inflation.

Rotich also proposed to introduce a customs warehouse rent for goods that remain at the port of discharge for a period exceeding 21 days. This could lead to heavier penalties on importers already burdened by clearing and forwarding firms that collude with container depots to delay clearance.

"Some importers have turned the Port into a storage area thus contributing toward congestion of cargo," said Rotich. This could see commodity prices pushed up further in the case of delays in discharging cargo.

Tax experts are raising the red flag on the introduction of the railway levy whose ripple effects, they say, would reverberate in the entire economy. Transportation costs, prices of clothing, motor vehicles, machinery and foodstuffs are expected to rise significantly in the next few months.

Already, consumers are shouldering a heavy burden of road maintenance levy to the tune of Sh3 per litre of fuel. Industry insiders fear that the proposed railway levy could further increase pump prices by Sh2 per litre.

"This (Railway Development Levy) is akin to the road maintenance levy that is already in place," said Steve Okello, Tax Partner at consultancy and auditing firm PricewaterhouseCoopers (PwC). "Its impact in the short-term will be inflation and increase in the prices of goods. There will be a short-term impact but in the long-term, it will be neutralized."

Atul Shah chief executive PKF said: "There will be an element of cost push inflation being triggered by the levy and consumers will bear that cost. In the short-term, inflation will hit us. If the funds are used for railway development, the overall long-term benefit will be a reduction in cost of goods... if 70 per cent of the truck traffic is moved to railway, it will mean a reduction in transportation charges as well as the wear and tear on roads. In the short-term, however, consumers will pay more."

Fuel prices

A fall in fuel prices had pushed down inflation rate to settle at 4.05 per cent in May, up from 4.14 per cent in April, but fears are rife that the proposed levy could re-fuel inflationary pressures and erode households purchasing powers. The situation could be made even worse with the re-introduction of VAT Bill, which proposes to slap a 16 per cent tax on basic commodities, such as unga, milk, sugar and bread.

The cost of farm inputs, including fertiliser, livestock feeds and pesticides will also go up by the same margin. This could lead to an increase in the prices of vegetables, fruits, maize and other farm products. In his budget statement, Rotich said the 1.5 per cent railway development levy, imposed on all imported commodities, is expected to mobilize Sh15 billion for the construction of the Mombasa-Kisumu Standard Gauge Railway line. The three-year project is expected to reduce the cost of freight.

Going by the Petroleum Import Bill of Sh326.9 billion recorded last year (2012), the National Treasury could generate about Sh4.9 billion from importation of crude oil to finance the development of the railway line per year.

Import Bill

The total import Bill for 2012, however, stands at Sh1.4 trillion: This could be the figure Rotich is eyeing in the next financial year with the new levy. The revenue raised could amount to more than Sh21 billion.

"The railway system will be good for the ordinary person, especially in the long-term," says Kariithi Murimi, a risk consultant. "If we can get it to work, the price of goods could significantly come down. For instance, when millers import maize and use the road instead of the rail, the cost incurred using the road is about Sh5 more than if they used rail. This is passed on to consumers. When oil marketers use the road, there is an extra Sh8 per litre of fuel."

The National Treasury is seeking to tap into new sources of revenues to finance the Government's ballooning expenditure needs. Faced with crippling revenue shortfalls, demands for higher pay by public servants, pressure for money from governors and a burgeoning public debt, Mr Rotich is desperate not to stifle the country's growth by cutting his development budget. He is counting on borrowing, support from multinational lenders and expansion.

Although the Secretary for the Treasury has set the domestic borrowing requirement at a fairly low level of Sh106 billion, indications are that the Government will be aggressive in the international market.

Standard Digital News - Kenya : Tax shocker in Cabinet Secretary Henry Rotich?s Budget in his bid to fund new rail system
Just what i feared.
 
Kabaridi

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There was one writer who was suggesting we continue the kibaki route of HIGH loans borrowing from china and HIGH spending as a means of grow the economy to double digits. The problem is that he remains vague on how this model addresses the ballooning debts.

It is not OK even though these loans come with monetary relief, because ultimately the country will either pay through other means; which will further degrade our heritage which will continue to suffer!! leaving the 70%+ flowering youth minus a posterity.

exemplary achevements during the kibaki administration include the revival and revampming of key parastatals and state coporations KCC, kenya meat commission KMC,

Kenya is historically proven to be prone to political uncertainity, and so has its sovereignty been muscled by foreign powers recently, not forgetting it can happen again. foreign companies that form an integral contribution to the economy have always expressed fears at pre and post election periods; can we still be assured of stabilty?? can we continue to blindly congratulate ourselves??
 

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