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These budget proposals will make struggling Kenyans' lives harder

By The Standard | June 15th 2020

There are many good things to talk about in the budget that was read in the National Assembly last Thursday.

It was, as The Standard put it, 'a budget to the rescue'. We do not take for granted government’s efforts to jump-start an economy that has been ravaged by the Covid-19 pandemic.

Everyone hopes that the billions of shillings poured into the economic stimulus programme will yield positive results. It is everyone’s wish that the Big Four agenda, whose drivers and enablers got more than Sh120 billion, will spawn jobs, food, affordable houses and better healthcare for Kenyans overburdened by the pandemic.

But that is the bright side. Some of the budget proposals are downright worrying and would make life worse - not better - for many Kenyans. As a result, the government would better be advised to reverse them.

Kenyans care for their senior citizens, especially those who worked hard during their prime days. Such individuals deserve to lead decent lives in their sunset years. That is why it is appalling to hear that Treasury is planning to raid their meagre retirement cash. They were taxed all their lives. Let's give them a break.

Secondly, the introduction of 14 per cent value-added tax (VAT) on cooking gas just when the country is trying to transition from dirty, harmful fuel like kerosene and charcoal is also cause for concern. Notably, a lot of people have switched to using Liquefied Petroleum Gas (LPG) after prices of kerosene went up due to introduction of VAT on petroleum products. The ban on logging also contributed to the growth in the consumption of LPG.

Unfortunately, some households are paying for this clean fuel through their noses. They did not switch to this expensive fuel because their income had increased, but because they had no choice. Introducing VAT on cooking gas will increase their financial burden further. Some will have little choice but to return to the dirty fuels.

Minimum tax proposal on loss-making businesses was also ill-advised and will discourage risk-taking. Even loss-making businesses do pay other taxes such as excise duty and VAT when they consume. However, they do not pay corporate income tax, which is levied on profits.

We understand Treasury’s position that some businesses have been reporting loss for long. That is unusual, as no business can stay afloat for long while making losses, unless there are hidden benefits. Such businesses should, of course, be called out.

However, start-ups take some time to break even. Such businesses spend more to establish themselves and it is only proper that they are encouraged to stand on their feet.  

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