CORPORATE INTELLIGENCE AFRICA ISSUE 0024 | Page 23

some years. “As a priority we must exercise prudent management of the public finances, especially the overall wage bill. “Today recurrent expenditure is reaching unsustainable levels, squeezing out resources meant for development,” President Uhuru said during his maiden speech in parliament. The jubilee government, which took office in April this year, has also come under heavy criticism after the VAT Bill was introduced in parliament earlier in the month. Lobby groups opposed to the new Bill opine that Bill if passed into law will impoverish Kenya since basic goods will be taxed. “Our leaders seem to be scrambling for our resources and are not concerned about the people. We will go to sleep one day with 50 per cent of the population living on less than a dollar a day only to wake up the next day with over 70 per cent living on less than a dollar a day. The only way to safeguard the poor is to implement Article 43,” said Civil society Congress President Morris Odhiambo. The proposed law seeks to levy taxes on basic commodities, although lobby groups and opposition say it will increase the cost of living.

Treasury Cabinet Secretary Henry Rotich

However, the Kenya Revenue Authority says the law, if passed by parliament, will ensure uniformity in payment of taxes in the country. Currently, imported goods and services inputs and supplies used in agriculture, health and education, computer hardware and software, air travel and supplies to oil exploration companies are zero-rated. In this financial year, the public wage bill is expected to hit Ksh314 billion, which experts say will affect development budget. The National Treasury said it will this financial year spend Sh314 billion to pay wages as county government will bring additional offices to the wages net. Commercial banks are also mulling over new levies on transactions after Finance Act introduced new taxes, an increment that will be passed on to customers. Kenya Bankers Association has already raised an alarm over imminent upward review of bank charges due to effects of Finance Act. In 2012, the government introduced a 10 per cent excise duty on all financial services including banking and mobile money transactions. The law was amended in the Finance Bill 2013 and was to become effective from June 18.

But Kenya Bankers Association has asked the government to review effective date to August in order to install machines that will enable them to collect the levy on behalf of the government. And beer drinkers have not been spared by the tight taxation measures as the Kenya Breweries increased their prices two times within four months. A crate of Tusker is now selling at Sh2, 714 up from Sh2, 523, which translates to a Sh8 increase per bottle at the wholesale level and sources at the brewer reckon that other products will rise by more than Sh10. The brewer says the prices were increased as a result of high cost of raw materials. There is growing concern that weak structures of county government will also lead to wastage and misappropriation of funds after most Governors’ priorities came under heavy criticism. Some county governments inherited debts and liabilities from former local authorities that could see some funds meant for development diverted to settle them. For instance, Nairobi and Mombasa counties have experienced strikes over salaries arrears, meaning that the two counties, which have put on a brave face over the matter, will have to look for more funds to clear up the mess.

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