This archive report was first published on 12 June 2020.
Finance Cabinet Secretary Ukur Yatani presented the Budget of 2020/21 at the Parliament buildings in Nairobi on June 11, 2020.
As part of measures to recoup Sh172 billion lost through tax breaks announced to help deal with the COVID-19 pandemic, Yatani plans to raise Sh535 billion by removing tax exemptions.
Prices of cooking gas, for instance, would jump from next month after the exempt-status on the Value Added Tax (VAT) was effectively lifted.
Similarly, all businesses would be required to pay a 'patriotic tax' just for being registered in Kenya at the rate of a percentage point of their revenues regardless of whether they booked a profit or loss.
Yatani justified the move by stating that the tax incentives have limited the capacity of the government to fund critical expenditures.
He added that a critical review of the incentives shows that consumers have not benefited through a commensurate reduction in the cost of goods and services.
It follows soaring resource needs which have today been compounded by the COVID-19 pandemic, whose implications on the economy have been depressed consumption and lost incomes.
President Uhuru Kenyatta also slashed the VAT by two per cent to 14 per cent to counter the impact of declining incomes while ensuring workers retained more of their salaries to spend.
However, millions of jobs have already been lost in many sectors, including in hotels which employed 1.2 million workers like waiters and chefs, according to industry statistics provided by the hoteliers lobby.
