Parliament defy IMF and Banks - DOUBLE DOWN on the Interest Capping

[hk]

We collect about 4 - 5 b dollars as vat..if we want to raise 70b more..we just need to raise vat to 17-18% from 16%.I had rather we raise vat to 18% on everything but leave fuel which is already overtaxed and would have the same systemic impact anyway.So raise vat to 18% and leave fuel alone.

KRA collects about 3b on vat not 4-5 https://www.icpak.com/wp-content/uploads/2016/10/ICPAK-FISCAL-ANALYSIS-2010-2015.pdf . Its very simple just slice the budget and enforce stringent financial management to reduce excesses. 

[RV Pundit]

Why are you using figures from 2010-2015 - when we are discusccing 2018/2019. KRA based on my calculation is expecting to collect 4-5B dollars from VAT (roughly 25% of total taxes)...and just raising VAT from 16 to 17-18% will be enough to plug this hole. Yes the budget can be reduced - but that will most likely mean slicing development portion of the budget!! Gov has little wriggle room - recurrent expeditur, debt repayment, unfunded pension and all the many constitutional bodies including counties that draw from consolidated funds - mean the only way is to slice 70B from development budget - that is about how much we are spending annually on the railway - so basically it as good as stopping SGR!!

So yes I think gov should simply consider raising vat from 16% to 18% for everything...it will be small pain all over the body than one sharp prick from the fuel. Fuel is already super-loaded with levies...so it reached the breaking point. It already generate a lot of billions for road maintenance.

And beside the rest of East Africa has 18% VAT - so ours is distorting the common market.

KRA collects about 3b on vat not 4-5 https://www.icpak.com/wp-content/uploads/2016/10/ICPAK-FISCAL-ANALYSIS-2010-2015.pdf . Its very simple just slice the budget and enforce stringent financial management to reduce excesses. 

[MOON Ki]

Its very simple just slice the budget and enforce stringent financial management to reduce excesses. 

Take a look at the Auditor-General's report for any one of the last few years.   The major thefts---NYS gunias of cash in basements etc.---are well known.   Lesser known is the thieving that is all over the place.   I did some quick sums on last year's report, and, even with rough calculations, it looked like well over 20%  in the year was either stolen directly (money just disappeared) or indirectly (paying, say, 20K shillings for something that actually costs 2K shillings).   

What you propose, which makes a great deal of sense,  cannot happen right now ... unless you have it mind that the eaters will suddenly become herbivores.   

[gout]

Now we are on to the mega dams - this is the next cash cows - kickbacks and land compensation are fool proof milking tactics. Out of the 600 billion 450 is up for grabs. As usual it has the moral arguments - we do this or people starve. The road to hell is surely paved with good intentions.

I like self preservation approach by Pundit- don't touch fuel - my truck business is bleeding - this is what is missing in Africa.

[RV Pundit]

Uhuru - propose reduction of VAT from 16% to 8% - super petrol kshs 127 to kshs 118 - diesel 115 to 107.

[gout]

Quite sensible and clever compromise for the noise of Kenyans and the IMF/markets signalling. Budget cuts and talk of tightening belts shows the shape of Treasury. Seems he owns the corruption baby with increments to courts and DCI.

Uhuru - propose reduction of VAT from 16% to 8% - super petrol kshs 127 to kshs 118 - diesel 115 to 107.

[Georgesoros]

Quite sensible and clever compromise for the noise of Kenyans and the IMF/markets signalling. Budget cuts and talk of tightening belts shows the shape of Treasury. Seems he owns the corruption baby with increments to courts and DCI.

Uhuru - propose reduction of VAT from 16% to 8% - super petrol kshs 127 to kshs 118 - diesel 115 to 107.

If that gets parliament approval i think its good.

[hk]

In my humble opinion there's nothing good or clever about uhuru's proposals. Shilling is still under pressure and CBK on thursday predictably had to rush to markets to sell dollars. Which means by months end the much vaunted forex reserves will have reduced. And that will reduce CBK firepower to protect the KES. Also as clearly pointed out by one of the analyst Eurobond holders might recall principal and interest due to withdraw of IMF standby loan https://www.businessdailyafrica.com/news/Markets-tense-as-Rotich-drops-IMF-backup-loan/539546-4758958-11d58l5/. This would be a nightmare. Uhuru should have established office of budget and management. This office would have been responsible of evaluation of all government expenditure to lower cost of obviously inflated prices.  The 8% vat reduction on fuel should have applied across the board to all products, thus lowering cost of everything that's vatable. The withdraw of IMF standby loan is as a result of failure and unwillingness to reduce budget deficit. Budget deficits its the reason why treasury is crowding out private sector and we consistently have high real interest rates(not the capped rate).BTW even after CBK spending reportedly $200m thursday and friday the KES still depreciated to 100.9 from 100.4.

[RV Pundit]

20% of what - qualified audit reports - of the budget? Of state agencies, parastalals & constitutional bodies? Otherwise our budget is already 25% education (majority spend on teachers salary)+25%(debt repayment)+huge percentage on pensions - so basically whatever can be stolen is probably - 20% of the 20-30% development - and maybe huge percentage of recurrent expenditure.

Take a look at the Auditor-General's report for any one of the last few years.   The major thefts---NYS gunias of cash in basements etc.---are well known.   Lesser known is the thieving that is all over the place.   I did some quick sums on last year's report, and, even with rough calculations, it looked like well over 20%  in the year was either stolen directly (money just disappeared) or indirectly (paying, say, 20K shillings for something that actually costs 2K shillings).   

What you propose, which makes a great deal of sense,  cannot happen right now ... unless you have it mind that the eaters will suddenly become herbivores.   

[Georgesoros]

In my humble opinion there's nothing good or clever about uhuru's proposals. Shilling is still under pressure and CBK on thursday predictably had to rush to markets to sell dollars. Which means by months end the much vaunted forex reserves will have reduced. And that will reduce CBK firepower to protect the KES. Also as clearly pointed out by one of the analyst Eurobond holders might recall principal and interest due to withdraw of IMF standby loan https://www.businessdailyafrica.com/news/Markets-tense-as-Rotich-drops-IMF-backup-loan/539546-4758958-11d58l5/. This would be a nightmare. Uhuru should have established office of budget and management. This office would have been responsible of evaluation of all government expenditure to lower cost of obviously inflated prices.  The 8% vat reduction on fuel should have applied across the board to all products, thus lowering cost of everything that's vatable. The withdraw of IMF standby loan is as a result of failure and unwillingness to reduce budget deficit. Budget deficits its the reason why treasury is crowding out private sector and we consistently have high real interest rates(not the capped rate).BTW even after CBK spending reportedly $200m thursday and friday the KES still depreciated to 100.9 from 100.4.

I agree with you here. There is need to reduce taxes across the board to 8%.

[GeeMail]

I'm just wondering if the reduced/increased VAT will spur growth in some major sectors that will generate jobs and spending that KRA will reap from. If that does not happen, while inflation rises and the markets are depressed in major ways, KRA will still miss targets and long-term everybody suffers. The only beneficiaries are the fat cats who will still steal the little we have in the basket and build/buy hotels, votes etc.

[Georgesoros]

I'm just wondering if the reduced/increased VAT will spur growth in some major sectors that will generate jobs and spending that KRA will reap from. If that does not happen, while inflation rises and the markets are depressed in major ways, KRA will still miss targets and long-term everybody suffers. The only beneficiaries are the fat cats who will still steal the little we have in the basket and build/buy hotels, votes etc.

Gee,
People will spend more instead of paying h govt. 8% for everything is fair.

[hk]

So uhuru wants to give betting companies reprieve  https://www.businessdailyafrica.com/economy/President-halves-betting-tax-to-15pc/3946234-4764520-fcd4xpz/index.html while taxing fuel 8%VAT? And oh yes instead of reducing wage bill the crackhead hires more people https://www.the-star.co.ke/news/2018/09/18/uhuru-hires-45-in-presidential-delivery-unit-to-build-legacy_c1820073 . Uhuru and jubilee government legacy is set in stone; complete incompetence.

[hk]

Jubilee government is raiding taxpayers pockets https://www.businessdailyafrica.com/economy/Workers-homes-levy-pay-deduction-up-three-times/3946234-4766296-98nwoo/index.html , This was increased from 0.5%.  Mpesa boom https://www.businessdailyafrica.com/economy/Uhuru-slaps-M-Pesa-with-66pc-mobile-cash-tax-rise/3946234-4766292-q25u7t/index.html increase of 66% on excise duty. Even airtime https://www.businessdailyafrica.com/economy/Airtime--data-price-rise-fears-/3946234-4766294-c8xgvyz/index.html . This is a horror movie. This essentially is being done to try to bridge the Gap on financing . So apart from taxing fuel 8% vat , Jubilee government also proposes to increase excise tax on money transfer, airtime, housing allowance  and God knows what else.
There's no way anyone who's affiliated with jubilee will get elected.

[RV Pundit]

If this is what will take to get more railways, roads, water dams and ports - so be it. If this is what will take to get free primary, free day secondary, free university and tivets - universal healthcare with NHIF that cover all treatments including cancers & likes - 1-2m housing schemes - and huge social program - this will work. Scandavian taxes 50% of their GDP - we are not even at 20%. South Africa are at 25%.

Education already takes 20% of all taxes collected - and that make sense - more than half of kenyan population are under 18 - school going kids - and we have to invest in them.

My friend stop thinking gov is some business motivated by profit. It isn't. Gov has higher ideals.

I think people will vote or not vote based on all those factors combined. Jubilee has done a good job and were resoundingly elected last year...nicking 54% of the vote...and I don't see why Ruto won't be elected again in 2022.

Jubilee government is raiding taxpayers pockets https://www.businessdailyafrica.com/economy/Workers-homes-levy-pay-deduction-up-three-times/3946234-4766296-98nwoo/index.html , This was increased from 0.5%.  Mpesa boom https://www.businessdailyafrica.com/economy/Uhuru-slaps-M-Pesa-with-66pc-mobile-cash-tax-rise/3946234-4766292-q25u7t/index.html increase of 66% on excise duty. Even airtime https://www.businessdailyafrica.com/economy/Airtime--data-price-rise-fears-/3946234-4766294-c8xgvyz/index.html . This is a horror movie. This essentially is being done to try to bridge the Gap on financing . So apart from taxing fuel 8% vat , Jubilee government also proposes to increase excise tax on money transfer, airtime, housing allowance  and God knows what else.
There's no way anyone who's affiliated with jubilee will get elected.

Jubilee government is raiding taxpayers pockets https://www.businessdailyafrica.com/economy/Workers-homes-levy-pay-deduction-up-three-times/3946234-4766296-98nwoo/index.html , This was increased from 0.5%.  Mpesa boom https://www.businessdailyafrica.com/economy/Uhuru-slaps-M-Pesa-with-66pc-mobile-cash-tax-rise/3946234-4766292-q25u7t/index.html increase of 66% on excise duty. Even airtime https://www.businessdailyafrica.com/economy/Airtime--data-price-rise-fears-/3946234-4766294-c8xgvyz/index.html . This is a horror movie. This essentially is being done to try to bridge the Gap on financing . So apart from taxing fuel 8% vat , Jubilee government also proposes to increase excise tax on money transfer, airtime, housing allowance  and God knows what else.
There's no way anyone who's affiliated with jubilee will get elected.