President Uhuru Kenyatta had termed the decision by MPs to suspend the implementation of the 16% VAT on petroleum products as “good politics, but bad leadership” he went on to say that the MPs had chosen an easier path, and to that end he was probably right. But did he also choose an easier one?
The MPs indeed chose an easier path when they postponed the 16% VAT without considering how the government was expected to meet the revenue gap created as a result. In fact, even with the enactment of the Finance Bill 2018 into law there’s still a gap of about Sh17 billion after the president attempted to appease the public by slashing the VAT on petroleum products from the 16 to 8%.
And while the president struggled to assure the public their taxes will be used prudently following the many corruption scandals that have seen tax payers lose billions of shillings; the devil as we all know are in the details. There’s a need to scrutinize the budget closely and see what exactly we’re funding.
For instance, this financial year, the government is planning to spend the equivalent of 15.9 percent of our GDP (Sh1.55 trillion) on recurrent expenditure. Meanwhile, the development expenditure is projected to cost Sh625.1 billion (equivalent to 6.4 percent of our GDP).
It’s worth noting that our appetite for debt also ensures an increased recurrent expenditure because of the interest payments factored under recurrent. However, a bloated wage bill remains the big elephant in the room, but first things first.
To begin with, the President whether out of political shrewdness or outright disregard for the wage bill crisis, created new offices that appeared as an attempt at bringing back the Assistant Minister positions through the back door. He said these positions – Chief Administrative Secretaries (CAS), would help the Cabinet Secretaries better coordinate the affairs of their respective ministries. Needless to mention the position comes with office staff and all the perks enjoyed by an officer at that level.
The President made that announcement in January with the full understanding of the wage bill crisis. In fact, at the height of campaigns last year, the President supported the proposal by the Salaries and Remuneration Commission (SRC) to reduce the pay for State officers and get rid of a range of allowances. He was quoted saying, “The days of wasteful allowances and peculiar but inexplicable payments are behind us. Better and more prosperous days lie ahead,”
Yet here we are with a more bloated Executive than we had in President Uhuru’s first term and Legislature that’s fighting the SRC on the same implementations which brings into question their sincerity on reducing Wanjiku’s tax burden.