Winners and losers in President Ruto’s Sh3.6trn budget
M-Pesa users, landlords and consumers are among the biggest losers in President William Ruto’s Sh3.641 trillion budget that seeks to introduce new tax measures and end state-funded subsidies.
And among the winners are jobless teachers who are expected to fill 30,000 vacancies in an anticipated recruitment drive, farmers who will benefit from an extended fertiliser subsidy, security officers who will see their perks improved and traders as the government steps up disbursement of the Hustler Fund.
Integration of Kenya Revenue Authority (KRA) systems with those of telecommunication companies to snoop on mobile money transactions is yet another step by the taxman to widen the tax net, having rolled out a similar plan for betting and gaming companies last November.
As a result of the integration, KRA collects tax revenue daily from the excise tax on betting stakes and withholding tax on betting winnings, and the linkage with telcos is expected to tighten the noose on tax cheats on a platform through which Kenyans moved Sh7.2 trillion last year.
The National Treasury on Wednesday published the draft 2023 Budget Policy Statement (BPS) for public comments, and the key policy document now reveals Dr Ruto’s priorities in his first budget that covers the financial year 2023/24.
The Treasury expects to collect Sh2.89 trillion in revenues in the 2023/24 financial year to fund this spending, a 15.1 per cent increase from the estimated Sh2.51 trillion to be collected in the current financial year, which will be supported by a retinue of new tax measures.
“The government will scale up revenue collection efforts by the KRA to Sh3 trillion in the financial year 2023/24 and Sh4 trillion over the medium term,” said the Treasury.
The government is also targeting landlords who are not paying income tax on their properties. Treasury has said it will map all rental properties to seal revenue leakages.
To reduce the fiscal deficit, the government has dropped subsidies on key commodities such as fuel and electricity in a move that will hit consumers, who are already facing a high cost of living, and has further promised to reduce tax exemptions.
Dr Ruto targets to accelerate funding for the fertiliser subsidy to boost crop production and plug the growing deficit that has seen the government temporarily waive duty on maize, sugar and rice imports.
“The economy is operating under tight fiscal constraints. This has warranted tough choices including suspension of subsidies on fuel, electricity and food to ensure that scarce resources are directed towards priority areas ... while ensuring that debt levels are sustainable,” Treasury said.
The exchequer said the implementation of its programmes during the new fiscal year will stimulate economic recovery to a growth of 6.1 per cent in 2023 up from a projected growth of 5.5 per cent in 2022.
Dr Ruto has prioritised education, health, infrastructure and national security, apportioning a significant increase in their budgets and underscoring the pivotal role he expects the sectors to play in enhancing Kenya’s socio-economic growth.
Treasury, which has retained the rail and marine transport dockets, has emerged as the biggest winner after securing an additional Sh57.04 billion, which will take its spending to Sh247 billion up from Sh189.96 billion.
Education has been allocated Sh539.9 billion, an increase of Sh13.96 billion from the current Sh525.94 billion, with the government eyeing the hiring of 30,000 teachers.
“In order to increase the teacher-to-learner ratio in primary and secondary schools, the government has provided resources to the Teachers Service Commission (TSC) to recruit 30,000 teachers,” said Treasury.
Arms of government
Parliament will get Sh39.88 billion, which is an increase of Sh1.41 billion, while the Judiciary, which has called for increased funding from the exchequer, will get Sh19.46 billion, an increase of Sh18.29 billion.
Other big winners include Infrastructure which will get Sh224.06 billion up from Sh211.4 billion, Health will get Sh140.6 billion up from Sh126.35 billion and Interior which will receive Sh146.81 billion up from Sh143.2 billion.
The Independent Electoral and Boundaries Commission (IEBC) will be the biggest loser after its budget was cut by Sh17 billion to Sh4.68 billion from Sh21.68 billion. The IEBC’s budget for the current year was increased to cater for spending in the 2022 General Election.
Energy has also emerged as a major loser, with its spending cut by Sh7.35 billion to Sh77.79 billion from Sh85.14 billion, while Public Service will have to do with a budget of Sh22.1 billion compared to Sh25.18 billion it was allocated in the current financial year.
Another loser is Crop Development, which has been allocated Sh26.13 billion compared to Sh35.7 billion this year, and Housing, which has been given Sh16.94 billion down from Sh20.04 billion.
Dr Ruto faces a fiscal deficit of Sh695.2 billion, a sharp drop from this year’s projected deficit of Sh849.2 billion, and plans to plug it through external loans of Sh198.6 billion and a further Sh496.6 billion in domestic loans.