We'll handle cost of living situation as it unfolds, says Yatani

Unlike the two previous budgets where Treasury introduced extensive relief measures to cushion Kenyans against increasing cost of living, this Budget somehow steered away from this.

Even as Treasury CS Ukur Yatani noted that high cost of living was among the four issues raised by Kenyans during consultations, a majority of the measures in the new Budget is industry-based – which if well-funded and implemented will still have the same net effect of softening prices of commodities.

Other than high cost of living, the other issues raised were high unemployment among the youth, income inequality and public debt burden.

In the 2020/21 Budget, Mr Yatani announced specific measures to increase liquidity among Kenyans, which included lowering tax rates for corporates and personal incomes, turnover tax, value added tax and relief to low-income earners.

The measures, which had earlier been announced by President Uhuru Kenyatta, saw Pay As You Earn and corporate tax rates reduced from 30 to 25 per cent while value added tax dropped to 14 per cent from 16 per cent.

Turnover tax was reduced to one per cent from three per cent. Those earning below Sh24,000 a month were given tax relief.

When the CS presented the 2021/22 Budget, he said the relief measures cost the government Sh172 billion in revenue in one financial year.

The measures were critical as 2020 and 2021 were dominated by the Covid-19 pandemic.

For the 2022/23 financial year, Mr Yatani said the government will handle situations as they come.

“The government will monitor all the domestic and external risks and take appropriate policy actions to cushion the economy and Kenyans in the event the risks materialise,” he said.

The CS said most of the concerns raised by Kenyans were associated with the negative effects of the Covid-19 pandemic.

This year’s budget is on the theme “Accelerating Economic Recovery for Improved Livelihood”.

Mr Yatani said by building on the progress realised in the measures implemented earlier, the Budget is geared towards returning the economy to a more sustainable growth path for improved livelihoods.

“The government will implement economic policies and undertake structural reforms geared towards improving the welfare of Kenyans," he said. "This includes aligning and accelerating implementation of the Big Four Agenda and the third Economic Stimulus Programme for sustainable growth.”