TAX NEWS - June 2010
No major tax hike for Kenya
Excise duty on beer went up from ksh45 to ksh55 and that of malt beer up from ksh54 to ksh65. Import duty on iron and steel, paint dryers and LED lamps and bulbs were removed as was withholding tax on leases.
Duty on wheat and rice were lowered by 10%, stamp duty penalties by 5%, mortgage by 0.1% and land rates by 1%.
Kenyatta said the growth of the economy was projected at 5% and inflation would be kept below 5%, while public debt would be maintained at 40%.
The bulk of the budget allocation (ksh140.5b) went to education.
Musalia Mudavadi, the former finance minister, lauded the budget saying it would jump-start the economy.
He promised that Kenya would fully implement the East African Common (EAC) market protocol and appealed to other EAC member countries to follow suit. Kenyatta said Kenya's growth will be driven mainly by increased investments in key sectors including agriculture, services, infrastructure, health and education and targeted strategic development interventions.
"The overriding policy thrust of the 2010/11 budget and the medium-term is to consolidate the economic recovery and put the economy back onto firm foundation of high and sustainable growth path," the minister said.
The bulk of the budget allocation (ksh140.5b) went to education with universal secondary education getting ksh16.2b and the universal primary education with ksh9.2b. Kenyans in the diaspora who want to make remittances were granted a one-year tax amnesty.
Analysts said it was a difficult budget that would rely on discipline and put pressure on Kenya Revenue Authority (KRA) to meet its revenue target of ksh609b this year.
The finance minister set aside ksh1.9b for construction of a standard gauge railway line between Mombasa and Malaba border to spur regional trade. He also mandated KRA to roll out electronic cargo monitoring and to partner with the central bank for a comprehensive audit of forex bureaus to end tax evasions.
"The recovery of the global economy is underway and that is good news for Kenya, although some challenges still remain. But it is important to note that the global finance and economic environment remains vulnerable, as evidenced by the recent sovereign debt crisis in Europe," Kenyatta said adding that "the Kenyan economy also recovered, although modestly, from the recent global recession and other exogenous shocks, growing by 2.6% in 2009, up from 1.6% in 2008."
Musalia Mudavadi, the former finance minister, lauded the budget saying it would jump-start the economy.
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