Budget Day: All you need to know
When the clock strikes quarter past three this afternoon, National Assembly speaker Justin Muturi will usher in Treasury Cabinet Secretary Ukur Yatani to make his 2021/2022 budget statement.
In the background, Yatani will have made the short journey from Treasury to the Parliament building after stopping to pose for photos at the foot of the exchequer building.
Pending the inclusion of surprise additions, Yatani’s second budget statement will likely follow this curated format.
To start with, the Cabinet Secretary will reflect on the year that was along the current macro-economic conditions which have largely been punctuated by by the COVID-19 pandemic.
For the first time in years, the budget statement comes ahead of the 2021 Economic Survey by the Kenya National Bureau of Statistics (KNBS) which would have traditionally painted a picture of the year that was.
Following a reflection on the state of the economy, Yatani will proceed to highlight areas of priority spending in the new financial year which dawns on July 1.
Unlike budget days of years past, the 2021 budget statement is all but complete with the exchequer having shares both its final budget estimates and the Finance Bill which carries with it new tax proposals.
Included in key areas of spending is a new Ksh.26.6 billion post-COVID-19 economic stimulus which is projected to anchor down the recovery of the economy from the peril brought by the pandemic.
Projects under the government’s transformation agenda dubbed the Big 4 are meanwhile expected to share out just over Ksh.135 billion.
The National government will meanwhile get the lion’s share of the budget at Ksh.1.946 trillion ahead of Counties at Ksh.370 billion and Parliament and the Judiciary which will split Ksh.37.9 billion and Ksh.17.8 billion from the budget respectively.
However, before any agencies get a share of their allocated monies, the budget will have a first charge of Ksh.1.327 trillion representing the Consolidated Fund Services (CFS).
This include Ksh.1.169 trillion in scheduled loan interest payments and redemption’s and Ksh.158.1 billion representing outstanding payments in the new fiscal year and salaries to Constitutional offices.
Total spending for the 2021/22 financial year is expected to round off to Ksh.3.642 trillion as carried in the budget estimates report by the National Assembly Budget and Appropriations Committee (BAC) report tabled Wednesday.
The budget is expected to be financed through Ksh.2 trillion in project revenues from both collections by the Kenya Revenue Authority (KRA) and appropriations from ministries.
A further Ksh.62 billion is expected to be sought from grants by Kenya’s development partners while the balance will be raised from both external and local borrowing.
Total financing (borrowing) is estimated at Ksh.953 billion to include Ksh.291.3 billion in net foreign financing and Ksh.661.6 billion in net domestic borrowing.
The net financing sum also represents the official fiscal defict by the National Treasury.
However, the fiscal deficit is unofficially in excess of Ksh.1.5 trillion with the exchequer ministry set to borrow an extra Ksh.608.9 billion to meet costs on debt redemption’s.
In another first in years, the National Treasury has not proposed any new income taxes under the 2021 Finance Bill.
Nevertheless, Kenyans will not be spared from greater taxes as the government strives to meet growing spending plans.
For instance, bread will see its tax status shift from zero rating to exempt effectively raising costs for the basic consumer commodity.
At the same time, the cost of importing motorcycles, popularly termed as bodaboda will shoot up with Treasury proposing the adjustment of excise duty on the imports from a flat Ksh.11, 608.23 to a rate of 15 per cent.
At the same time, jewelry and alternative tobacco products such as nicotine pouches will attract excise duty at the rate of 10 per cent and Ksh.5000 per kilogram respectively.
Punters will also be hit as the 20 per cent excise duty on amounts wagers returns after its temporarily deletion last year.
Besides taxes, other proposals in the Finance Bill seek to empower the Kenya Revenue Authority (KRA) to better collections including a lengthened period to scrutinize tax payer records up to seven years from the current five.
Further, informants on tax matters will see their reward enhanced to a maximum of Ksh.5 million while the KRA will be allowed to contract third parties in the collection of digital services tax.
Both the budget estimates and proposals in the Finance Bill remain under scrutiny by the National Assembly with the house beginning its deliberations on the two key policy statements on Wednesday.
The pair of policies form the basis of the Appropriations Bill and the 2021 Finance Act, both of which will require final assenting by President Uhuru Kenyatta.