Sh1.9trn budget big on growth projects

National Treasury Cabinet Secretary Henry Rotich outside the Treasury building in Nairobi on June 12, 2014. FILE PHOTO | SALATON NJAU |  NATION MEDIA GROUP

In Summary

• Wananchi have until February 4, Wednesday next week, to present their input on the 2015/16 expenditure plan.
• Taxman is expected to collect Sh1.34trn in 2015/16 financial year up from Sh1.162trn this year.

By MWANIKI WAHOME
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The government is proposing to increase its expenditure plan by nine per cent to Sh1.9 trillion in the 2015/16 financial year.

“The policy aims at shifting more public resources from recurrent to capital investment so as to promote growth,” reads the draft Budget policy statement released on Friday.

The public have until Wednesday next week to make submissions before it is presented to the Cabinet for approval and submitted to Parliament by February 15.

Once approved, the statement will guide the government revenue and expenditure plan for the next 12 months starting July.

It comes with a pledge to maintain the current tax rates but the Treasury promises “a review of the Income Tax Act will commence shortly.”

The government says it will major on “rationalisation of expenditures to improve efficiency and reduce wastage”.

Recurrent expenditure still takes the lion share at Sh939 billion, almost half of the expenditure plan. The four per cent increase comes against a backdrop of salary increase demands from teachers and other civil servants.

Development projects will take up Sh675 billion, a 21 per cent jump, compared to Sh560 billion allocated in the current financial year ending in July.

“This allocation is above the constitutional minimum of 15 per cent of the latest audited revenues of Sh776.9 billion for 2012/13,” said National Treasury Cabinet Secretary Henry Rotich.

In order to meet increased demand for development funds, the government intends to improve tax collection to Sh1.34 trillion in the next financial year presenting a bigger challenge to the taxman.

The projected amount for the current financial year is Sh1.162 trillion.

FACED WITH SHORTFALL

Ordinarily, revenue will amount to Sh1.242 trillion in 2015/2016 from the projected Sh1.068 in 2014/2015.

The overall expenditure and net lending are projected at Sh1.875 trillion or 28.8 per cent of the Gross Domestic Product from an estimated Sh1.717 trillion or 30 per cent in the current financial year.

Kenya Revenue Authority is, however, faced with shortfall in the projected amounts this year, with the full year amount estimated at Sh17.8 billion against additional expenditure estimated at Sh61.7 billion.

“The collection is underpinned by on-going reforms in the tax policy and revenue administration,” says Mr Rotich.

The amount to be collected next year is equivalent to 26 per cent of the GDP compared to 20.3 of per in 2014/2015 financial year.

The debt collector is undertaking reforms to seal revenue collection loopholes by automating systems for convenient remittance, easier monitoring and administration.

The i-tax and the cashless payment plan in public service vehicles are some of the ongoing reforms.

The wage bill for the national government excluding ministries, departments and agencies that are captured in grants and transfers in 2015/2016 is projected at 5 per cent of the GDP.

Overall, the deficit and financing expenditure and revenues balance is projected at Sh535.4 billion or 8.2 per cent of the GDP in the next financial year.

Including grants, overall fiscal balance (commitments) is projected at Sh476.5 billion or 7.3 per cent of GDP in 2015/2016 against an estimated overall balance of Sh496.46 or 8.7 per cent of GDP in 2014/2015.

“Fiscal deficit for the 2015/2016 is to be financed by net external financing of Sh287.6 billion or 4.47 per cent of GDP and 186.8 billion or 2.9 per cent of net domestic borrowing.