Rotich budget was close to economic, political realities

Devolution CS Mwangi Kiunjuri (Left) his Treasury counterpart Henry Rotich and PS Kamau Thugge outside Treasury building on their way to parliament to present 2017/2018 budget statement. PHOTO | SALATON NJAU | NMG 

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Summary

• Broadly speaking, Mr Rotich kept his pre-budget promise not to introduce new or increase taxes.
• The minister’s decision to take his pound of flesh from the lucrative and fast growing gambling industry was also laudable given the acrimonious public discourse on the subject in recent months.
• Keen followers of Mr Rotich’s budget must have been left wondering whether it is fully funded with the numbers adding up.

On the balance of it, Treasury secretary Henry Rotich’s budget stayed close to the current economic and political realities.

This being an election year, it was politically impossible for the Mr Rotich to suggest any measures that would add to the burden ordinary citizens already bear with regard to taxation.

Broadly speaking, Mr Rotich kept his pre-budget promise not to introduce new or increase taxes. In fact, most of the tax measures he introduced aimed to ease the pain of costly consumer goods, ensure fairness and to improve social welfare.

Take the removal of value added tax on staple foods such as bread and maize meal -- for instance – a measure that is clearly intended to reduce the pain of high ‘unga’ pricing that millions of consumers are grappling with as well as bear political fruit later in August.

The challenge, however, is one that the minister himself acknowledged. In the recent past, such measures have failed to impact the intended people but have instead been hijacked by big business, distributors, traders and middlemen.

That begs the question as to why the minister chose to follow the same route knowing similar measures have failed in the past. Then there was the very spirited attempt to support the manufacturing sector through a raft of tax measures – including a reduction of tax on locally assembled vehicles serving the local tourism industry as well as a deepening of support to special economic zones.

The minister’s decision to take his pound of flesh from the lucrative and fast growing gambling industry was also laudable given the acrimonious public discourse on the subject in recent months.

Setting aside some portion of public funds for social welfare, such as payments to senior citizens and their coverage for health insurance, was spot on.

Keen followers of Mr Rotich’s budget must have been left wondering whether it is fully funded with the numbers adding up.

This is because there was little indication of how much tax measures such as the 50 per cent tax on the gaming and gambling industry or the excise tax adjusted for inflation would collect – given the high revenue target set for the taxman.

The next couple of months will certainly tell the story.