On the face of it, the rejection of the Finance Bill and proposed amendments by the President are laudable.
This is the statesman response Kenyans have been expecting from a listening president. He has heard Kenyans and done one better than Parliament in the reduction of VAT to 8%. He even bettered my proposed reduction to either 10% or 12%.
Removing the whole VAT tax wholesome would have been counterproductive to the economy, especially government ability to raise even recurrent expenditure. But retaining it at a high of 16% was punitive and insensitive to the basic needs plight of Kenyans.
It doesn’t however mean immediate relief on cost of essential goods. It requires Parliament to accept the President’s proposals before relief at the petrol pump can set in. There is also the high cost of electricity to consider, which I didn’t hear the President on.
I therefore still ask the president to suspend current implementation of VAT 16% on fuel until Parliament considers his proposals.
Uhuru also did well to restore the Judiciary’s strangled budget that will ensure justice is not hampered by lack of resources. I also feel vindicated with his proposals to increase funding for anti-corruption agencies. It was a worthless course to fight corruption with your hands tied by lack of resources.
However, the President’s silence on how he intends to manage massive public debt spoke volumes. I do hope asset recovery will be revamped to ensure a balanced budget and repayment of the heavy debt burden.
But the devil is in the details.
There is an ominous twist to the President’s seeming magnanimity. The threat of cutbacks in ministries, and Parliament. The President seems to be placating hawks in his administration who had threatened that VAT reduction will of necessity sin pro quo mean cutbacks in essential services delivery. These include Universal Health Care (UHC).
I do hope the cutbacks are not retributive but only target no-essential capital projects prone and primed to be pilfered.
As at now, I am not sure of the status of the poorly thought housing, sin and money transfer taxes all of which the MPs did better to remove. I do hope the President agreed with parliament that they were of nuisance value. Retaining them will not absolve the government for invading sanctity of freedom of choice. ‘
What this VAT circus has revealed is the need for a predictable and consistent taxation regime and policy environment.
However, subject to my preliminary and cautionary exceptions above, I do hope Parliament stops fretting over this Bill anymore so that Kenyans can begin breathing easy by next week.
Hon. Musalia Mudavadi, EGH.
ANC Party Leader and NASA Founder.