You could be taxed more to raise the Sh2.97trillion to fund the country’s budget for the next fiscal year but cutting back on borrowing for the first time in four years.
Treasury’s spending plan seeks to inject Sh1.975 trillion into recurrent expenditure between July 2021 and June 2022, while development projects would get Sh611billion.
Devolved units’ expenditure is projected to cost Sh377.63billion, with an additional Sh5billion going to the contingency fund.
Yatani in his Budget Policy Statement (BPS) has indicated priority will be on completion of ongoing projects, with tighter approvals of new ones to limit budgetary pressure and wastage.
“Going forward into the medium term, the government will continue with its expenditure prioritization policy with a view to achieving the transformative development agenda which is anchored on provision of core services, ensuring equity and minimizing costs through the elimination of duplication and inefficiencies, creation of employment opportunities and improving the general welfare of the people,” says Yatani in his 2021 BPS.
However, in what appears to be pointer to more taxation, Yatani says in the draft BPS that it targets raising an additional Sh194 billion from ordinary revenue.
An alternative to taxation increments would be to widen the tax net and seal tax revenue leakages.
Ordinary revenue, which includes tax on goods, services, salaries and imports, is projected to grow to Sh1.764 trillion from the Sh1.57 trillion that is targeted in the current financial year.
“We expect revenue collection in the financial year 2021/22 to spring back, buoyed by the improving economic environment, tax policy and revenue administration measures that we have put in place,” said Yatani.
The Treasury projects that a rebound in revenue collection would help the government to slash borrowing from the Sh1trillion in the current financial year to Sh937.7billion, which will be mainly financed through domestic market sources.
The higher budget target, coupled with cuts in borrowing, is expected to put pressure on the Kenya Revenue Authority (KRA) to improve its collection performance in the face of tough economic times.
The National Treasury’s budget is proposing Sh1.922trillion for the Executive, being 65.3 percent of total budget while Parliament and the Judiciary will get Sh37.88 billion and Sh17.92 billion respectively.
The education sector has been given an allocation of Sh505.1 billion, an increase of about Sh5billion from the current fiscal year, while national security funding has risen from Sh154.5 billion to Sh170billion.
The focus on education will continue to be 100 percent transition from primary school to secondary school, with the pupil-teacher ratio having improved gradually from 41:1 in 2017/18 to 40:1 in 2019/20.
The Treasury has proposed Sh119.85 billion as allocation to the health sector, a rise from Sh111.7 billion in current financial year.