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• It’s Budget Week, Fuel Week

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It’s Budget Week, Fuel Week

There are two major events planned for this week that will have far-reaching consequences for your wallet, whether individual or enterprise, for the next month to the next year.

• On Thursday 13th June, the CS for Treasury will present the budget for the next fiscal year, as FY 23/24 draws to a close.

• The Finance Bill 2024 has been even more controversial than Finance Bill 2023, which increased the VAT on petroleum to 16 percent, among other major tax measures.

• Then, on Friday 14th June, the energy sector regulator will set the fuel prices for the next month.

Multiple organisations and individuals have submitted comments during the public participation phase of Finance Bill 2024, offering insights from how increasing costs on vegetable oils, financial services, cars, batteries, and tax burdens for foreign-owned companies, will worsen everything from the cost of living to the ability of enterprises to do any meaningful business in Kenya.

A year ago, the then seven nations that made up the East African Community presented budgets worth a total of $83bn, which included fiscal measures that have increased the cost of living and led to job losses. In Kenya, this included upping the VAT on petroleum from 8 to 16 percent, and increase of turnover tax. One major warning about the VAT proposal was that it would lead to lower demand, which would have such ripple effects as to be counterproductive.

Petroleum was the biggest import in 2023 at KSh. 606bn, with the next import by value being machinery at less than half that, according to figures from the Kenya National Bureau of Statistics. Despite this, the taxes and the subsequent suppressed consumption lowered the demand from 5.9 bn tonnes in 2022 to 4.3bn tonnes in 2023, the lowest in years. The declines were despite the fact that crude oil prices have been on a decline, despite oil-producing nations’ attempts at keeping it above the $80 a barrel mark.

• While petroleum isn’t a major issue in the Finance Bill 2024, and prices have eased due to a strengthening shilling, there are other major tax proposals that might worsen the cost of living if they are passed this June.

• The taxes would compound the issues caused by CBK's raising, and then maintaining, the benchmark interest rate at 13% from February.

• The apex bank first raised the interest rate in December 2023, from 10.5% to 12.5%, before raising it two months later to the current rate.

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Don't forget to attend these events...

Headlines you might have missed

Interview of the Week

Have a great week!