The Budget didn't have much for the Mwananchi.... or did it?

By John Kuria

I keenly listened to Uhuru Kenyatta deliver his less than colourful budget with a lot of expectation and bated breath.

I am still not sure whether l am disappointed, or should take what he said with a pinch of salt. For the most part, the Budget was more of an act of balance, as Uhuru clearly mentioned in his speech.

Most people expected that the tax rates would be widened to try and cushion the employed from the inflation that has raised the cost of basic commodities.

But the Minister for Finance argued that this might reduce the number of people in the tax net, and hence reduce revenue collections.

I would have expected to see some attempt at increasing the tax relief from the current Sh13, 944 per annum. At least this measure would have eased the burden on taxpayers. Instead, the minister shoed away from this measure that would have definitely seen taxpayers cushioned from the high tax burden, compared to the rising cost of living.

On the up side, it will come as a relief that individuals who earn just employment income, and whose employer deduct and remit Pay As You Earn (PAYE) will not be required to file tax returns. Giventhat a majority of the employed have just one source of income, the move reduces compliance costs associated with the filing of returns. There was also good news for the students in various colleges and universities, who were finding it difficult to get internship opportunities, which in most cases translate to actual employment opportunities.

For the first time ever, companies that provide internship to young people will now enjoy tax relief. If the measure is implemented well, it will definitely encourage firms to take on the students, and provide them with the needed hands on experience required in the job market.

But while this measure is to be applauded, l think the devil will be in its implementation.

l can already see it being archived just like myriad other noble measures that the Minister proposed, but which lack proper implementation — like the Kazi Kwa Vijana initiative which would have provided employment to many youth.

The Minister also proposed a raft of other measures that would reduce the cost of living for the common mwananchi.

These include removal of duty on kerosene, rice, wheat, and maize.

And perhaps soon you will be able to draw more from one’s pension fund because the Minister has reduced some of the costs associated with running of the pension fund schemes by the removal of the need for pension fund managers to invest solely in guaranteed funds.

The increased allocation to the elderly, which rose from Sh1,500 per month to Sh2,000 per month, will also go a long way towards improving the welfare of these senior citizens.

But the key to making measures a reality and having the mwananchi feel their full effect lies in implementing the proposed measures properly and in timely manner otherwise, we shall be continually looking forward to the next budget!!

This article was written by John Kuria, Manager, Deloitte Kenya.

The views expressed in this article are the author’s and not necessarily those of Deloitte Kenya.

Please visit http://www.deloitte.com/ke for more on our Budget 2011 analysis.