NAIROBI: Senior citizens and low-income earners emerged the biggest winners in this year’s Budget unveiled by Treasury Cabinet Secretary Henry Rotich Thursday. The Budget however slapped heavy taxes on gamblers.
Minimum taxable income was raised to Sh13,495 from Sh11,135 in a largely populist budget that also outlined urgent measures to slash the cost of food – specifically maize flour and bread, which are now tax-free.
Unlike previous budgets that saw several new revenue generation streams outlined, the state singled out the booming gaming industry and alcoholic beverages for additional taxation while sparing other sectors from further tax pain.
Coming less than five months to the August 8 General Election and consolidating gains made in previous years, Mr Rotich delivered a pro-poor budget that seeks to reverse the soaring cost of food occasioned by prolonged drought and maintained caution on putting the struggling economy on a recovery path.
“Considering the hardship and suffering associated with the recently declared national disaster as a result of the widespread drought in the country, white maize will be imported on a tax-free basis for a period of four moths,” the CS told the packed National Assembly chamber. He warned that he would not hesitate to withdraw the tax relief should manufacturers and other traders in the flour and bread value chain fail to cut retail prices for consumers.
“Manufacturers, wholesalers and retailers who sell such goods will be expected to reduce the prices of these basic commodities, failing which I will reverse the policy,” warned the CS in a speech read about three months before the usual mid-June date.
It was easily the biggest relief for millions of Kenyans currently battling high food prices – a 2kg packet of maize flour is currently at a historic Sh140 mark.
Classifying maize meal and bread as tax-exempt commodities means that all the inputs in the production
process should not be taxable, implying that manufacturers can claim back the VAT components in the production chain.
Rotich’s address also sought to guarantee a major relief through a monthly allowance for all citizens above the age of 70, who have now been granted free medical insurance.
Cash transfers amounting to Sh9.7 billion were allocated to senior citizens in the targeted age bracket; their numbers are estimated at one million.
It was however not clear how much the state would pay elderly Kenyans in the proposed structure even though the payments had been pegged at Sh2,000 a month.
Rotich, for the second time in a row, raised the personal tax relief for the working class, expanding the tax brackets and personal relief – both by 10 per cent. It was a measure structured to address income inequality, Rotich said in his address that lasted 104 minutes.
The lowest-paid workers are the biggest beneficiaries of the wider tax brackets and higher relief, meaning a worker earning Sh13,485 will not pay any taxes. The take home for such a worker will rise by Sh185 following the income tax amendments that will take effect on January 1, 2018.