Raila pledges to lower cost of living, doing business

ODM leader Raila Odinga with her running mate Martha Karua.

Photo credit: File

Analysts are skeptical about the practicality of a raft of radical proposals by Azimio la Umoja One Kenya presidential candidate Raila Odinga in his manifesto, if elected on August 9.

His key target is to lower the cost of living by lowering the cost food and hopes to do this by increasing productivity and reducing the cost of energy, including electricity and fuel by lowering taxes. He also plans to lower the cost of doing business by eliminating red tape.   

Through his “Fukuza Njaa” slogan, the former Prime Minister hopes to achieve food security for the nation by increasing production, ensuring adequate stocks and dealing with exploitative traders.

Mr Odinga has also promised to reduce the cost of agricultural, livestock and aquaculture inputs, such as fertiliser, to enhance food production, improving handling, packaging, transport and distribution, and promoting agricultural mechanisation for small-scale farming.

To lower the cost of energy, he has promised to expand the rural electrification programme to ensure more households are connected to the national grid, invest in power generation for use at affordable cost and lowering system losses that are usually passed on to consumers.

Mr Odinga has promised to lower taxes and levies on petroleum products and establish strategic reserves to cushion consumers from market supply disruptions. He will also enhance gas exploration and invest in a crude oil refinery facility.

A key product

Kenya charges a 16 per cent value added tax (VAT) on liquefied petroleum gas (LPG) and an 8 per cent VAT on fuel, which has contributed to the high prices of the product that generated Sh232.4 billion to the government in revenue last year.

Fuel is a key product whose price has a huge bearing on the cost of living owing to its reliance for transportation of goods, electricity generation and heating and cooking.

“Energy access is a critical enabler in unlocking potential and transforming lives through accelerating enterprise creation and job opportunities. We are committed to the long-term lowering of electricity tariffs leading to the direct reduction in the cost of production,” states the manifesto.

The Azimio candidate has also vowed to fight graft and arraign officials that loot public resources meant for development projects. He pledged to accelerate the recovery of looted public resources and fast-track legal and administrative reforms to facilitate the fight against graft.

To boost the employment of individuals with artisanal skills who have no formal certification, Mr Odinga has promised to implement a ‘Recognition of Prior Learning’ (RPL) certification programme to award certificates to skilled craftsmen and technicians.

He has also promised to grant small and medium-sized enterprises (SMEs) a three-year tax holiday upon their registration as taxpayers with the Kenya Revenue Authority (KRA).

Mr Odinga has also committed to establishing a Sh1 billion revolving loan fund for the boda boda sector at concessional rates for purchase, maintenance and operation of motorcycles.

He will also harmonise licenses in various sectors and ease business application permits to enhance the ease of doing business and reduce bureaucratic disincentives to trade and investments.

Key commodities

Analysts said lowering tax on key commodities will be a significant boost to consumers as it will reduce the cost of living. They, however, warned that effecting these changes will not yield the desired results unless Mr Odinga’s government keeps its spending in check.

“It is a good thing if you reduce taxes because it will increase consumption and revenue collection will pick up on its own. But what successive governments have ignored is having sustainable expenditure,” said Mr Nikhil Hira, a tax partner at Kody Africa.

Taxes are a critical revenue-raising measure by the government and lowering them would have an adverse effect on its ability to organically finance its budget. If elected, Mr Odinga will have to implement the Sh3.3 trillion budget that kicks off next month with a deficit of Sh846 billion.

Should he lower taxes immediately, Mr Odinga would be faced with a headache on how to plug the short-term revenue deficit.

“Even in your household, you first look at what you earn and then decide on how to spend it. He (Mr Odinga) should prioritise minimising wastage and corruption in government spending because that is what burdens citizens with high taxes,” said Mr Hira.