By Joakim Bwana-Standard
Prime Cabinet Secretary Musalia Mudavadi has asked Kenyans to tighten their belts for a three-year economic turmoil that has seen skyrocketing prices of essential goods and services.
He said the government would make hard and unpopular decisions, including reduction of the workforce through trimming state corporations to pull the country from economic crises.
“There are a lot of surgeries to be done because the state corporations perform duties that can be done by a few agencies. It is populist politics in some enterprises, and it has been undermining the process, but tough decisions shall be made, and we seek your support,” said Mudavadi.
Addressing over 3000 accountants in Mombasa, he defended the Kenya Kwanza regime’s economic strategies, including the proposed 3 percent housing levy.
The Accountants under the Institute of Certified Public Accountants of Kenya (ICPAK)are deliberating on the proposed Finance Bill 2023, among other issues.
There is no room to lie to Kenyans, I agree the tax levies are painful but where are the Easy options?
To run, you must have a budget and we must raise revenue. It will take at least two to three years of rehabilitation for the economy to get out of the woods. Things went bad before Kenya Kwanza came in, and the situation is still bad, said Mudavadi.
I confirm the levy is not a tax but a contributory investment. Therefore, I confirm that the contribution is a savings plan deduction with benefits accruing to the employee,” he said.
He said the public debt ceiling is Sh10 trillion which means the government has legroom to borrow only Sh600 billion and not more. Hence it will result in delays in remittance to county governments and paying salaries.
“The shilling has depreciated. How much can you borrow internally? It will hurt us two to three years, but we shall get out of it, “be assured.
He said the five percent withholding tax is a proposal open to discussions and reviews.
“Let us remember that the Finance Bill is a proposal, and we are open to views and some adjustments can be made to navigate in these hard financial times. If you want us to cede some taxes, give an option, for the deficit will be unmanageable,” said Mudavadi.
On the 16 percent VAT on fuel, he said the government seeks to raise between sh50 to 80 billion within months, and there is no available option. He said the fuel subsidy used to cost sh16 to 20 billion per month depending on the exchange rate when the consignment was coming in.
ICPAK chair George Mokua said weak corporate governance sits behind many of the failures in financial reporting, which have seen some of Kenya’s largest companies experience financial difficulty.