This archive report was first published on 11 June 2020.
On Thursday, June 11, 2020, Treasury Secretary Ukur Yatani will present his maiden Budget Statement at the National Assembly, outlining a Sh3.2 trillion Budget for the year starting July 1.
The Budget includes a stimulus package to combat the economic impact of the Covid-19 pandemic, which has ravaged lives globally. Kenya's economic growth is expected to drop to 1.5 percent this year, and contract one percent in the worst-case scenario.
Mr Yatani's Budget includes new taxes on items like cooking gas and bread, which will be moved from the old rate of tax-exempt to the 14 percent VAT bracket. The tax measures are aimed at shoring up revenues to fund the 2020-21 Budget, which will increase by 21 percent from the current set expenditure of Sh2.68 trillion.
The proposed tax changes are contained in the Finance Bill 2020, which has already been tabled in the National Assembly. The Finance Bill includes the elimination of tax reliefs for hiring helicopters, buying aeroplanes, tractors, and cookers, as well as the elimination of tax breaks for importation of cars by civil servants working abroad.
Other measures include the introduction of a minimum tax of one percent on company sales, a digital tax of 1.5 percent on sales of foreign tech companies with earnings from Kenya like Uber and Google, and the removal of relief for workers saving for home ownership.
"This will be a simplified format of the Budget estimates and the Finance Bill that are already in Parliament," Mr Yatani said. "There will be no new taxes beyond the changes declared in the Finance Bill."
The expanded Budget includes a Sh53.7 billion package to keep the country afloat, as well as a total of Sh5 billion set aside to hire local labour for infrastructure works and Sh10 billion to fast-track payment of outstanding VAT refunds and other pending payments.
