The Treasury Cabinet Secretary Professor Njuguna Ndung’u on Thursday evening presented the Kenya Kwanza administration’s first Budget, barely nine months after the conclusion of the 2022 General Elections that saw the election of Dr William Samoei Ruto as the country’s 5th President.
Under the theme Bottom Up Economic Transformation Agenda for Improved Livelihoods of Kenyans, the 2023/24 budget was a mixed bag that had goodies for several sectors as well as tough prescriptions for other individuals, sectors and businesses.
In this article
Winners in the 2023/24 Budget
Allocations
- The National Government – KSh 2.2 Trillion
- Consolidated Fund – KSh 986 Billion
- Education Sector – KSh 628.6 Billion, made up of KSh 32.3 Billion for Free Primary Education, KSh 103.9 Billion for free Day Secondary School
- County Governments – KSh 385.4 Billion
- Infrastructure-Roads, Railway building and Rehabilitation – KSh 244.9 Billion
- Security Sector – KSh 338.2 Billion
- Health Sector – KSh 141.2 Billion
- Constituency Development Fund(CDF) KSh 53.5 Billion
- Agriculture Sector-KSh 49.9 Billion
- Parliament – KSh 41 Billion
- Judiciary – KSh 23.2 Billion
- Equalization Fund – KSh 7.9 Billion
- Landlords have had a tax on rental income reduced from 10% to 7.5% to promote compliance among this class of taxpayers
- Removal of LPG to encourage the use of clean households by households.
- Goods from Export Processing Zones and Special Economic Zones, manufactured using local materials and sold within the EAC customs union to be tax exempt
Tax Winners
- Tea purchased from factories or tea auction centres for value addition and subsequent export will also not be subject to Value Added Tax.
- Valued Added Tax (VAT) from all aircraft, simulators for training pilots and aircraft spare parts, inbound international sea freight offered by registered persons and locally purchased machinery and equipment will be removed.
- The cost of money transfer will reduce after Treasury proposed to bring down the excise duty from 20% to 15% on fees charged for telephone and internet data services and on fees charged for money transfer services by banks, money transfer agencies and other financial service providers.
Losers in the 2023/24 Budget
- Salaried workers who will pay a Housing levy at the rate of 1.5% of the basic salary
- Those in the high-income brackets, earning between KSh 500,000-800,000, are to be charged Pay As You Earn (PAYE) Tax at the rate of 32.5% and those earnings over KSh 800,000 per month to pay income tax at the rate of 35%. The move by the CS is to introduce two new bands in the income tax bracket, to target high-networth individuals.
- Digital assets (like Bitcoin and NFTs) owners are to pay a transaction tax at the rate of 3%
- Introduction of a withholding tax of 5% on monetisation of all digital content
- The turnover tax which was eased at the height of the COVID-19 pandemic to amounts above KSh 50 million has in this budget had the threshold lowered to KSh 25 Million.
- Alcohol/ Betting, Gaming and Gambling firms hit as they will pay 15% on advertising on TV, Newspapers, Billboards and Radio Stations.
- Imported Cement is to be charged excise duty at the rate of KSh 1.50 per kilogram or 10% duty whichever is higher, in order to protect the local cement manufacturing industry from cheap imports
Key Concerns
While the Kenya Kwanza administration’s budget is shrouded in uncertainty following the controversial Finance Bill 2023, which has yet to go through the third reading, there are also concerns that little resources have been allocated to the development expenditure side of the budget, which is only about 20% of the entire KSh 3.68 Trillion plan.
The Finance Bill is the document that lay down revenue-raising measures that will be used to finance the National Budget. Its passing is thus critical in the entire budget-making process.
“This new administration took over an economy that has been hit by numerous shocks including climate change effects, food insecurity and high cost of living. The budget must therefore have a policy framework that will address these issues,” said Treasury CS Professor Njuguna Ndung’u moments before making his speech on the floor of the House.
By 30th June, an Appropriation Bill is expected to be tabled and passed by the House before it is signed into law by the President-marking the tail end of the budget-making process.
“This budget came into being as the country went through numerous external shocks including the Russia-Ukraine conflict and post-COVID-19 pandemic effects. We are faced with high cost of living and high debt that is approaching the KSh 10 trillion limit. We are implementing fiscal consolidation by reducing expenditure and raising revenue and not borrowing to cut on the debt load. We will do well in the medium-term although Kenyans will have to tighten their belt,” said Chris Kiptoo-Treasury Permanent Secretary.
ALSO READ; Live Blog: Treasury CS Njuguna Ndungu unveils Sh3.6 trillion 2023/24 Budget
