The budget of Sh3.64 trillion contained in the 2022 Budget Review and Outlook Paper (BROP), an increase from an earlier estimate of Sh3.55 trillion, is set to put pressure on the Kenya Revenue Authority (KRA) to aggressively collect taxes.

It will also mean higher taxes for the citizens even as President William Ruto calls for every adult to be included in the tax bracket.

In comparison to the Sh2.82 trillion indicated in the 2022 Budget Policy Statement, revenues are anticipated to rise to Sh2.9 trillion.

The difference of Sh695.2 billion will be plugged using debt, with domestic borrowing estimated at Sh496.6 billion and external borrowing at Sh496.6 billion. The government has launched the Hustler Fund as an intervention to correct market failure problems at the bottom of the pyramid.

“This programme aims to lift those at the bottom of the pyramid through structured products in personal finance that includes savings, credit, insurance and investment,” said the Treasury in BROP 2022 released on Tuesday.

As Kenya strives to recover from the bad impacts of the Ukrainian war, Covid-19, and drought, the majority of the next administration’s spending, which will start next July, will be on programs aimed at economic recovery. By enacting policies that benefit individuals at the bottom of the food chain, President Ruto will have the chance to fulfil some of the campaign pledges he made through his Treasury Cabinet Secretary, such as bringing millions of the poor out of poverty.

Treasury’s forecast of greater economic performance in the near future is a major factor in the updated revenue expectations, which represent a rise of Sh76.9 billion over estimates in the 2022 Budget Policy Statement.

Job market

 Income tax, which comprises employer and employee contributions, was increased from Sh1.18 trillion to Sh1.2 trillion, a sign that the government anticipates better job market fortunes. Excise duty has also been revised upwards to Sh352.7 billion from Sh346.9 billion following inflation adjustment on this tax head, popular known as the sin tax.

Treasury currently anticipates increased excise tax revenue from alcoholic beverages, cigarettes, fruit juice, sodas, bottled water, cosmetics, and other beauty products.

The medium-term revenue strategy, which is currently being developed, will direct tax reforms, improve the tax system, and increase revenue over the medium-term, according to the Treasury.

According to the Treasury, to strengthen the fiscal position, the budget for financial year 2023/24 and over the medium term will focus on revenue mobilisation and containment of expenditure growth.

As Kenya strives to recover from the bad impacts of the Ukrainian war, Covid-19, and drought, the majority of the next administration’s spending, which will start next July, will be on programmes aimed at economic recovery.

Ruto administration intends to reduce unnecessary spending and has already eliminated some of the gasoline subsidy while retaining fertiliser subsidies to lower food costs.

Critics, however, say the President does not care about the most vulnerable and has exposed them to harsh and expensive living conditions but removing food and energy subsidies.