The offices of President William Ruto and Deputy President Kithure Kindiki have reinstated non-essential expenditures that had earlier been dropped in the wake of the collapse of Finance Bill, 2024.
The proposals signal a return of spending binge that could lead to increased taxes in the financial year beginning July.
Budget proposal documents presented to the Treasury show the presidency will be seeking nearly Sh1.62 billion, largely for the earlier shelved refurbishment of buildings, purchase of specialised communication and networking equipment, and mechanical garage.
The planned allocations were scrapped in the current financial year in the wake of underperformance in revenue collections and withdrawal of taxation measures which followed the deadly Gen-Z-led anti-government protests in June and July 2024.
The documents, however, show the budgetary allocations for the stalled refurbishment of State houses and lodges, the President’s Harambee House office, the Deputy President’s Harambee Annex office, and the official residence in Karen represent a fraction of nearly Sh7.60 billion cash requirements for the projects.
The projects were part of the expenditures that were dropped as part of austerity measures adopted after the collapse of the tax bill left an estimated Sh344.3 billion hole in the budget.
As a result, the Kenya Revenue Authority (KRA) has been aggressive in clamping down on tax cheats and widening the tax net to the informal sector to grow revenue collections.
The KRA’s enforcement unit has enhanced the use of various databases to pursue suspected tax cheats, including bank statements, import records, motor vehicle registration details, Kenya Power records, water bills, and data from the Kenya Civil Aviation Authority, which reveals individuals who own assets such as aircraft.
Car registration details are being used to smoke out individuals who are driving high-end vehicles but have little to show in terms of taxes remitted.
Kenya Power meter registrations are also helping the taxman to identify landlords, some of whom have been slapped with huge tax demands.
“KRA is investing in resources to collect and analyse intelligence to identify and address tax evasion schemes. Companies and individuals that deliberately evade taxes are subject to investigations and potential prosecution,” Commissioner for Domestic Taxes Department Rispah Simiyu told the Business Daily via email late last year.
“Both third-party and internal data are used to identify businesses that are not adhering to tax laws. Audits and compliance checks are conducted to address non-compliance. The KRA is also exploring integration opportunities with key stakeholders to enhance the effectiveness of information use for improving tax compliance.”
With some of the taxes that had been halted after the deadly anti-government protests being reinstated through the Tax (Amendment) Act 2024, some of the non-priority projects that had been hit are set to resume.
The tax measures, and additional ones that will start in July, are expected to help the KRA grow taxes to Sh2.732 trillion from a projected Sh2.389 trillion this fiscal year —a growth of 14.4 percent or Sh343 billion.
The proposed budget documents show refurbishment works at State House in Nairobi will get an additional Sh180 million in the year starting July if cleared by the Treasury and subsequently lawmakers.
The documents show the figure is less than half Sh389 million required.
The refurbishment works at State House Nairobi — which includes repairing cracks in the walls, re-painting, re-fixing ceilings, refitting lighting systems, and upgrading of CCTV system and plumbing works — have been ongoing since the financial year starting July 2015, but only gathered steam in recent years.
The total cost of the project, which is expected to end in June 2027, is projected at slightly more than Sh1.77 billion.
The project had gobbled up a cumulative Sh775.7 million at the end of June 2024, with some Sh997 million outstanding, according to budget documents.
The State House in Mombasa is set to get Sh55 million more cash for unfinished makeover works. The State Houses in Nakuru and Kisumu have been allocated Sh55 million and Sh28.1 million respectively.
The refurbishments of Mombasa State House and fence have cost Sh418.2 million since 2015 with a balance of Sh968.2 million.
Nakuru’s expenditure stood at Sh424.4 million of the total projected cost of Sh1.19 billion, while Kisumu’s works have taken Sh35.3 million out of Sh245.1 million total project cost.
Makeover works at Kakamega and Sagana State lodges will be allocated an additional Sh30 million each, Kisii’s (Sh25 million), while unfinished works at Mtito Andei State Lodge will not get any cash next financial year.
Prof Kindiki’s official residence will receive Sh50 million for refurbishment and Harambee Annex office (Sh35 million). An additional Sh15 million will go towards the makeover of the former Provincial Commissioner’s office in Mombasa, which is also under the Deputy President’s office.
State House will also get an additional Sh200 million for the resumption of the Sh655.1 million ICT Networking and Communication Equipment project, Sh17 million more for the purchase of specialised plant, equipment, and machinery whose total cost is projected at Sh422.4 million on completion, while the mechanical garage will receive Sh20 million more.
The Executive Office of the President is to get Sh800 million for makeover projects which had been stopped on the back of austerities.
The projects include the refurbishment of Harambee House (Office of the President), which will be allocated Sh50 million more, while the modernisation of the press and refurbishment of buildings at the Government Press is expected to get Sh500 million.
Other key projects set to resume under Harambee House are those under the Directorate of Resource Survey and Remote Sensing, which is to get Sh150 million more funding and the National Fund for the Disabled of Kenya (Sh100 million).