Budget draws mixed reactions

Written By: KBC reporters
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Kenyans have expressed mixed reactions to the 2019-2020 budget saying there was nothing to celebrate.

While manufacturers and consumer lobby groups commended the budget, alcohol consumers and gamblers were hard hit following increased taxes on the items.

There was a general feeling that the government had finally taken measures to cut the public wage bill, which had been a subject of debate in recent years. Civil servants were also targeted.

Cabinet Secretary for National Treasury, Henry Rotich, froze further recruitment of civil servants, except for key technical staff, security personnel, teachers and health workers.

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The Government will also not extend the service of thousands of civil servants set to retire after attaining the age of 60.

Treasury announced plans to undertake another purge on the Government payroll to weed out ghost workers.

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Losers

Gamblers, consumers of alcoholic drinks and tobacco products are the biggest losers after the government proposed to increase taxes.

Borrowers have also not been spared too after Rotich proposed to repeal section 33B of the Banking Act 2016 giving banks the leeway to determine interest rates on loans.

Rotich argues that this will unlock credit for Small, Medium-Sized Enterprises and the private sector.

CS said the country needed to raise revenue up to the tune of 2.1 trillion shillings to finance the budget, and in doing so, he slapped 15 per cent excise duty on alcoholic beverages and tobacco products.

Gambling activities were also on the receiving end after the Cabinet Secretary proposed to introduce excise duty on betting activities at the rate of ten per cent of the amount staked.

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Those in the Boda-boda and tuk-tuk transport service were also not spared after Rotich introduced new insurance proposals aimed at covering the riders, passengers and even pedestrians.

Gainers

All new capital projects have been frozen while ongoing ones will be audited by the public debt management office.

Bankers, those in the construction industry and cane farmers were the biggest winners.

In a bid to address the huge backlog of tax refunds, Rotich has proposed to reduce withholding tax from 6 to 2 per cent, while forming a team to scrutinize all pending refunds with the aim of clearing the backlog in the next two months.

Plastic recyclers have been given a lifeline with the removal of all VAT on all services offered to the players in the sector.

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The move is expected to help deal with the menace of pollution. Importers of steel and allied metal products will also face higher import bill, with the CS retaining the ad valorem rate of 25 per cent.

Imported duty of raw timber has also been abolished in a move meant to shield local forests from logging.

The government has further reduced excise duty on imported electric cars from 25 to 10 per cent.

Rotich proposed that the Banking (Amendment) Act, 2016 be amended by repealing section 33B of the Act that gives the central bank power to set the benchmark lending rates. This is expected to unlock credit to the private sector.

One billion shillings was allocated for settling dues owed to sugar cane farmers.

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