Expectations, fears as 2014/15 budget looms

By Jackson Okoth

The National Treasury has been asked to set out clear guidelines on what taxes, levies and fees are to be charged by the National and County Governments.

This follows protests witnessed in various counties, including the latest protest by vehicle owners in Nairobi over a hike in parking fees.

“At present, county governments are at liberty to charge whatever rates and this has the effect of pushing up cost of doing business in these regions. It is our expectation that the 2014/15 budget should be able to address this confusion,” said Federation of Kenya Employers (FKE) Chief Executive Jackline Mugo.

Treasury has already opened up to receive submissions from individuals, institutions and the private sector on economic policy measures they would want included in the 2014/15 budget. This is in line with Article 201 of the Constitution, which requires public participation in the budget making process.

Weighing in its concerns is the private sector, which is keen to see government cut down on its huge wage bill and channel these funds to productive sectors of the economy.

“We shall be watching to see how the Government deals with its ballooning huge bill and wasteful expenditure in non-productive activities,” said Vimal Shah, Chairman of Kenya Private Sector Alliance (Kepsa) and Chief Executive, Bidco Oil Refineries Limited.

The private sector lobby group is urging the Government to maintain its investment in infrastructure and also increase its capacity to implement public projects.

“There is need for Government to maintain spending momentum on infrastructure because this has long-term implications on the economy. At present, a lot of public projects remain on paper due to capacity problems,” said Mr Shah.

Kepsa is also pushing for more cash to finance e-government, a process that will see digitised delivery of most public services. This includes a techno-savvy police force that can adequately deal with crime.

There are fears that Capital Gains tax could be introduced for securities, a move that could spell doom for the capital markets. 

Capital gains tax

“Attempts have been made to introduce capital gains tax on securities. We hope this measure will not feature in the upcoming budget because it could sound a death knell on the industry,” said John Kirimi, who is the chairman Kenya Association of Stockbrokers and Invest Banks.

The Stock brokerage fraternity is also hopeful that the upcoming national government fiscal plan for the year 2014/2015 will have a framework that allows county governments to float municipal bonds, giving them a cheaper source of long-term finance.

“More incentives should be given to investors who want to raise capital, offering competition for deposits to commercial banks,” Kirimi said yesterday.