Third Eye

CS must temper taxes with harsh realities

Thursday, April 7th, 2022 07:00 | By
Treasury CS Ukur Yattani
Treasury CS Ukur Yattani. PHOTO/File
Treasury CS Ukur Yattani

National Treasury Cabinet Secretary Ukur Yatani will this afternoon be between a rock and a hard place when he steps into Parliament to unveil President Uhuru Kenyatta’s Sh3.3 trillion legacy budget.

The budget, which comes earlier than expected due to a looming General-Election, will set the pace for the Presidency to complete whichever projects can be finalised quickly.

Yatani will be hard-pressed to consider recent cries to ease the spiralling cost of living that has been the bane of the nation since Covid-19 struck, amid a deeply divided government, the General Election and drought that continue to hurt the economy. The budget presentation also comes in the midst of an ongoing invasion of Ukraine by Russian forces which is snarling global logistics.

The pain has been compounded by the increasing cost of fuel, which has been in short supply as oil marketers slug it out with the government over unpaid fuel subsidies.  National Treasury will also have to ensure that it honours tax promises made to the Bretton Woods institutions, particularly the International Monetary Fund (IMF), and spur growth in an economy that is already heavily taxed.

Treasury must also follow the general policy direction of the FY2022/23 budget, which is to accelerate economic recovery through implementation of an Economic Stimulus Programme (ESP) with the State expected to ring-fence revenue to complete most of the ongoing mega projects that the Jubilee regime started.

All eyes will be on the Treasury boss to provide a magic wand that will satisfy the budgetary obligations despite claims that Kenyans are among the heavily taxed people in the world, coupled with a surging debt portfolio. Kenya’s debt stock is said to have grown to Sh7.99 trillion as of September 2021, having risen by 19 per cent from June 2020, reflecting an increasingly constrained fiscal space and high debt burden environment.

Unfortunately, even economic growth which is expected to hit 6 per cent may not be forthcoming due to drought, election jitters and global logistics challenges. With such uncertainty in the economy and the increasingly hostile political environment, expectations are that the government will focus on social-economic issues in the short-term as opposed to ambitious development projects.

But as for the ordinary Kenyan, whichever side the policy documents direct spending, it is expected that it will not only spur growth but also cushion the poorest among us during these tough times.

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