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The 2016-17 Budget Analysis; The Winners & Losers……

Treasury CS Henry Rotich yesterday did a delicate budget balancing act that emphasised several social spending measures targeted to curry favour with the voting masses as we head into an election year.

While it contained far-reaching proposals on development, it raided the wallets of middle-income earners who will shoulder the burden of funding a large budget deficit with more taxes and levies and hit women and motorists even as it offered a rare relief to salaried workers.

The budget, just like a double-edged sword, gives poor families relief with one hand but takes it with the other.

The following is the list of the winners and losers in this year’s budget proposals:-


Various cushioning perks for the youth, women, elderly and the vulnerable, among them Sh21.1 billion for gender and youth empowerment programmes.

Uwezo Fund also received Sh1.6 billion.

A separate youth empowerment programme funded by the World Bank with a view increasing access to youth-targeted employment programmes and improving their employability is also on sights of the government.

A tax rebate scheme to employers who absorbed at least 10 fresh graduates for a period of six years and beyond in a bid to reduce runaway unemployment.

Sh. 1.5bn to cater for the promotion of sports and cultural activities especially to improve sports facilities in Eldoret, Mombasa and Kisumu.

Sh. 7.5bn to cater for orphans, a number of whom are in children's homes across the country.

Sh. 7.5bn and Sh. 6bn for the elderly and the Internally displaced persons still languishing in camps respectively.


Workers in the lowest income tax band (earning below Sh10,165 per month) will now have their bonuses, overtime and retirement benefits exempted from tax. The government proposes to expand the tax bands and increase personal relief by 10%.

This means the lower band will now start at Sh11,181, up from Sh10,164, while the ceiling for the bottom tax band will rise Sh42,782 from the current Sh38,893.

The minister also increased deductible tax relief by 10 per cent to Sh15,338 from the current Sh13,944.


In the Sh332billion for the Education sector budget, Sh32.4 billion has been allocated for free day secondary education while Sh14.7 billion for free primary education.

Loans for university students and pay for registration of exams for all students in primary and secondary have also been featured in the education apportionment.  

Sh4.5 billion goes to recruitment of 5,000 new teachers and promotion of regular teachers, with Sh2.8 billion for the second phase of the teachers’ house allowance.

Sh2.8 billion has also been set aside for teachers’ House Allowance Phase II.

Sh1.6 billion went to the upgrading of schools, some of which are currently conducting classes under trees.
Sh. 13.4bn was allocated to the Digital Literacy Programme geared to fully implementing the school laptop programme and to rollout tablets and computer labs across the country.

Sh4.3 billion and Sh4.5bn for Free maternal health and to lease medical equipment to equip the county hospitals respectively.

The Kenyatta National Hospital and Moi Referral are to get Sh9bn and Sh5bn respectively.
Another Sh500million will be for the Health Insurance Programme, among other health interventions.


Sh12.2 billion allocated for ongoing irrigation projects to be spent also on transformation of agriculture from subsistence to productive commercial farming.

That amount includes the Sh6.4 billion allocated to the Galana Kalalu and Mwea irrigation projects.


Sh4.9 billion has been set aside to subsidise fertiliser and seeds besides a Sh8.4 billion plan for the modernisation of the Kenya Meat Commission, the revival of the pyrethrum sector, a livestock and crop insurance scheme as well as the mechanisation of agriculture.

Meru region miraa farmers are also set to benefit from a Sh1 billion crop diversification programme, with coffee farmers gaining from a Sh2.4 billion programme for coffee debt waiver and Stabex.

Coffee, tea and sugarcane farmers will also benefit from funding, debt waivers and Duty exemptions.


Sh.124.04bn to the Defence Ministry and the National Intelligence Service (NIS), while a further Sh. 140.6bn to the State Department of Interior and Coordination of National Government towards military and police modernisation, lease financing of police motor vehicles, enhanced security operations as well as to police and prison officers medical insurance scheme.

Money was also set aside for the construction of 20,000 housing units for police officers by partnering with Shelter Afrique.


The opening of standard gauge railway next year and construction of the second phase to Naivasha commencing later this year.

Sh9bn for covering unsurfaced roads vulnerable to the elements through the Low-volume Sealed Roads Programme.


Sh4.5 billion plus incentives to the sector that include exemption from Value Added Tax (VAT) of fees charged for entry into parks which means that people will pay very little to access parks.

Commission earned by tour operators will be exempted from VAT.

Increase the airport tax for both internal and external travel to help promote the sector. External travel charges will improve by 25% to Sh5,055 and from Sh. 500 to Sh. 600 for internal travel.


Sh. 30bn for 14 marginalized counties allocated under Equilisation Fund.


Huduma Centres  to be rolled out to all the 47 counties.

Sh. 2.8bn, Sh. 2.1bn and Sh300 million were allocated to the Ethics and Anti-Corruption Commission (EACC), the Department of Public Prosecutions and the Financial Reporting Centre respectively, to help fight graft.

The UK Government has agreed to repatriate Sh52 million as proceeds of corruption from the Smith and Ouzman case and the Government is also expecting another Sh525 million from the Jersey Island Government being proceeds from the entity that was used to transfer illicit money from one of the parastatals (Kenya Power).

Increasing the capitalisation of banks from the current Sh1 billion to Sh5 billion to ensure banks have a strong and stable banking system to save them from recent incidents such as receivership that has so far affected three banks.

The proposed reduction of the prices of stoves by lowering import duty on the products from 25 to 10% will impact positively to mwananchi.

Liquefied petroleum gas will also be cheaper in the proposals to amend the VAT Act and exempt them from VAT. This could encourage poor families to switch from kerosene to gas for cooking. Mr Rotich scrapped the 16% VAT from the commodity in an effort to reduce heavy reliance on toxic firewood and charcoal by low-income earners. The action is expected to lower refill prices by Sh400.


Tax concessions for property developers who build more than 1,000 houses a year was introduced in order to reduce their corporate tax from 30 to 20%.

Developers were also a happy lot after Treasury removed all levies charged by National Environmental Management Authority and National Construction Authority in order to reduce the cost of doing business.



Motorists will have to bear the pain as the government will now demand Sh.6 more for every litre of petrol as the Road Maintenance Levy rises from Sh12 to Sh18 per litre.


The common citizen will now bear the brunt of increased tax on fuel that is likely to lead to steeper commodity prices and higher transports costs.

The poor who depend on paraffin to cook will be hardest with changes in the fuel economy with the price of kerosene set to rise by at least Sh6 per litre after the re-introduction of exercise duty on kerosene.

Cosmetic products will, beginning next month, attract a 10% excise duty meaning that women will pay more for personal care. The products affected include skin lotions, shampoos, hairstyling products and perfumes.


The middle and upper class will now have to dig deeper into their pockets to import vehicles worth over Sh1 million after the CS amended the Excise Duty Act, 2015, to revert to the earlier 20% duty on the price of motor vehicles.

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