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Editorials

EDITORIAL: Rotich Budget statement a major disappointment

Henry Rotich
National Treasury CS Henry Rotich at Parliament buildings during budget presentation for the fiscal year 2018/19 on Thursday, June 14, 2018.PHOTO | DENNIS ONSONGO | NMG 

Treasury secretary Henry Rotich’s Budget statement in Parliament on Thursday can only be described as an exercise in obfuscation. First, its reading late in the afternoon and gross summary of key segments such as the proposed changes to Value Added Tax measures made full understanding of it nearly impossible.

This is because the minister chose to turn the important annual speech into a public relations exercise – spending nearly three quarters of the time revisiting allocations to various sectors of the economy and only briefly passing through the critical tax measures.

It cannot be said that Mr Rotich did not know the majority of people who chose to follow his reading of the statement mainly did so for purposes of understanding the tax measures he has introduced and their impact on their lives.

A few examples would suffice. The proposed repeal of the all- important law that placed caps on interest rates means that consumers are soon going to find themselves back in the old regime where banks charged up to 22 per cent interest on loans.

Then there is the proposed tax of 0.5 per cent of an employee’s pay that both employees and employers will be required to contribute towards the newly-established housing development fund, besides the proposed increase in import levies whose impact will be to push up the cost of imported goods.

These are grossly impactful measures – whether one looks at them from a household budgets point of view or cost to employers in an environment where profits have been falling and many companies downsizing.

Most surprising, however, is the casual manner in which the minister passed over tax measures in key areas such as value added tax and excise tax that are bound to grossly impact the cost of living.

One would have thought that Mr Rotich understood the anger that exists among the Kenyan public over rampant corruption in government in which billions of shillings of taxpayer funds have been lost.

That understanding would have informed his speech writers to go slow in elaborating the allocations of billions of shillings to various sectors of the economy – which to many Kenyans once again sounds like putting the money at the disposal of the corrupt networks to ship out.

The right policy approach at this time would be one that seeks to use the tax measures to leave the most money in the hands of citizens by way of less taxation not taking it away from them.

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