The Treasury has set President William Ruto’s first budget at KES 3.64 trillion as Kenya’s fifth Head of State builds his economic legacy that promises to create jobs for millions of the poor.
The budget of KES 3.64 trillion contained in the 2022 Budget Review and Outlook Paper (BROP) is an increase from an earlier estimate of KES 3.55 trillion and puts pressure on the Kenya Revenue Authority (KRA) to aggressively collect taxes.
Most of the new administration’s spending, which will begin next July, will be on programmes aimed at economic recovery as Kenya tries to shrug off the negative effects of the Ukrainian war, Covid-19 and drought.
Revenues are expected to increase to KES 2.9 trillion compared to KES 2.82 trillion given in the 2022 Budget Policy Statement.
The difference of KES 695.2 billion will be plugged using debt, with domestic borrowing estimated at KES 496.6 billion and external borrowing at KES 198.6 billion
“The government has launched the Hustlers Fund as an intervention to correct market failure problems at the bottom of the pyramid. This programme aims to lift those at the bottom of the pyramid through structured products in personnel finance that includes savings, credit, insurance and investment,” said the Treasury in BROP 2022, which was released on Tuesday.
BROP 2022 provides the fiscal outturn for the financial year 2021/22, the macro-economic projections and set sector ceilings for the FY 2023/24 and the Medium-Term Budget.
The revised revenue projections, an increase of KES 76.9 billion compared to estimates in the 2022 BPS, are largely due to the Treasury’s expectation for improved economic performance in the near term.
Income tax, which includes revenues from employers and employees, was revised upwards from KES 1.18 trillion to KES 1.2 trillion, an indicator that the government foresees improved fortunes in the job market.
Excise duty has also been revised upwards to KES 352.7 billion from KES 346.9 billion following inflation adjustment on this tax head, popular known as the sin tax.
The Treasury now expects the taxman to collect more excise taxes from alcoholic drinks, cigarettes, fruit juice, sodas, bottled water, cosmetics and other beauty products.
“To strengthen the fiscal position, the budget for FY2023/24 and over the medium term will focus on revenue mobilisation and containment of expenditure growth. The Medium-Term Revenue Strategy being developed will guide tax reforms, improve the tax system and boost revenue over the medium-term,” said the Treasury.
With President Ruto calling for the KRA to include every adult into the tax bracket, the approved the fiscal year 2022/23 budget, the Treasury says, broadens tax collection.
Read also; IMF Approves KES 55 Billion Loan to Kenya for Budgetary Support.
