By Edward Kipkalya
President Ruto’s inaugural budget, famously known as the “Hustler’s Budget,” has generated considerable controversy and opposition within Kenya. Dubbed “Rutonomics,” this budget aims to address the nation’s challenges head-on. However, its implications for businesses, households, and vulnerable populations have sparked mixed reactions and ideological divisions. As we delve deeper into the intricacies of this budget, only time will reveal its true nature: good or bad, fatal, or futuristic, dynamic or disastrous.
The Ambitious Targets
Kenya’s FY 2023/2024 budget stands at a staggering Ksh. 3.6 trillion. The Finance Bill proposes tax changes designed to achieve several objectives: expanding the tax base, increasing revenues, reducing external debt, fostering economic growth, and tackling unemployment. Balancing these ambitious goals, managing debt, and fulfilling expenditure requirements simultaneously is a daunting task. Consequently, the government finds itself in a precarious position, especially concerning the country’s youth.
Major Tax Reforms
To address the multifaceted sectors of the economy, the budget introduces significant tax changes in various legislative acts. The affected tax categories include the Income Tax Act, VAT Act, Excise Duty Act, Tax Procedures Act, Miscellaneous Fees and Levies Act, Penalties and Interests, as well as licenses and tax rates. While these changes have the potential to bring positive outcomes, they also carry short- and medium-term implications that may affect the poor, working class, and vulnerable Kenyans.
Potential Misses and Negative Consequences
- Job Freeze, Cuts, and Restructuring: The budget may result in job losses and structural changes, impacting individuals and their families. (Kenyan National Bureau of Statistics, Employment and Labor Force Statistics Report, 2022)
- Shortage of Basic Commodities and Increased Cost of Living: The scarcity of essential goods could exacerbate the already high cost of living, further burdening ordinary citizens. (Central Bank of Kenya, Inflation Report, Q1 2023)
- Heightened Risk of Tax Evasion, Corruption, and Poverty: Ill-designed tax changes may inadvertently foster an environment conducive to tax evasion and corruption, perpetuating the cycle of poverty among the youth. (Transparency International, Corruption Perceptions Index, 2022)
Recommendations for President Ruto’s Government
- Contextualize Kenya’s Economic State: President Ruto’s administration should consider the current economic conditions and most of the citizens’ financial status while formulating policies.
- Promote Reforms to Support Economic Growth: The government must progressively enact legal, policy, institutional, and regulatory reforms that stimulate enterprise growth and cushion economic hardship.
- Embrace Digital Transformation: Modernizing and supporting digitally secure and enabled public services will enhance efficiency and convenience for citizens.
- Re-evaluate Tax Clauses: The government should eliminate, modify, or recall oppressive and ineffective tax clauses, ensuring better future tax measures that align with the government’s objectives and expenditure requirements.
- Transparent Communication: President Ruto’s government should effectively communicate how this radical budget will work and help Kenyans understand its impact, importance, and consequences.
Conclusion
As we dissect President Ruto’s “Hustler’s Budget” through an economic lens, it becomes apparent that its success hinges on its ability to address the pressing needs of Kenya’s youth. By embracing the recommendations outlined above and leveraging data-driven policymaking, president Ruto’s administration can ensure that the budget translates into tangible opportunities, inclusive growth, and a brighter future for the country’s youth.
The writer is currently the IT Governance Officer at ELF-Africa (www.elfafrica.org). You can connect with him via Twitter: @Edward_Kalya
