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MPs set stage for Sh37 billion budget cut

by kenya-tribune
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The stage is set to trim the 2018/19 budget by Sh37 billion this afternoon even after MPs differed over the cuts on Thursday morning.

The National Assembly agreed with the Supplementary Budget proposed by President Uhuru Kenyatta despite valid views from the members.

The passage of the Committee of Supply paved the way for the publication of the Supplementary Appropriation Bill, 2018, which will be tabled in the afternoon.

MPs will also consider the President’s Reservations to the Finance Bill, 2018, which contains various taxation proposals.

The Budget and Appropriations Committee has already tabled a report agreeing to lower the VAT on fuel from 16 per cent to 8 per cent as proposed by the President.

During the debate, Majority leader Aden Duale said MPs’ mileage, CDF and house allowances have not been touched.

“CDF is key me, mileage is key too, but those items have not been touched. I want us to engage from a point of facts and figures,” he said.

Duale said MPs are leaders who represent the people, and they should lead Kenyans rightly.

“Let us not lead the people from the middle, we should lead from the front. We should not give piriton or panadol for something that we can cure with amoxyly,” he said.

“Let us not give short-term statements… let us face this and look at the debt level that we have accrued.”

The Garissa Township MP said Kenyans should not blame the March 9 handshake between the President and Opposition leader Raila Odinga for the eight per cent value added tax.

“As I support this report, you know there are people who are blaming the handshake, however, the principal thing about the handshake is that we agreed to put the interest of the country first,” he said.

“When NASA leadership speaks and you are a member, you have to heed its call pleas for our national interest, let us all come together and solve this issue. I beg to support this.”

Minority leader John Mbadi, who also supported the report, said Kenyans have to think on how to maintain financial integrity as a country.

“I want to remind my colleagues that we have been attacked that we don’t engage our minds so seriously. I stand here to support the report on the supplementary budget estimates of 2018,” he said.

“I want to admit that we need to recognise that we are facing tough financial times. We have to really think on how to maintain our financial integrity.”

Details: Uhuru cuts VAT, opts to tighten spending

But Emuhaya MP Omboko Milemba opposed the President’s memorandum. He said MPs appear to have dumped citizens immediately their interests are taken care of.

“The proposals before us are not good for Kenyans. I’m not happy when the leadership in the House directs the motion on this budget allocations and proposals,” Milemba said.

“I oppose in totality! It is wrong for the House leadership to create an impression that if our interests like CDF, affirmative action fund and salaries are taken care of, then we leave the rest of Kenyans to suffer- that would be selfish.”

Kisumu West MP Olago Aluoch said the tenet of modern democracy is that there should be no taxation without representation.

“If it was not for this committee, and we had left this in the hands of Treasury CS Henry Rotich and those mandarins at Treasury, where would the country be led?” Aluoch asked.

Earlier, Speaker Justin Muturi suspended the sitting for 30 minutes for members get a copy of two reports tabled in Parliament.

“Familiarise yourself so that when we resume, debates are informed by the reports,” he said.

The MPs softened their opposition after the government agreed not to slash the CDF and the National Government Affirmative Action Fund.

Proposed cuts in the two funds had angered most MPs who pledged to marshal the two-thirds majority required to overturn the President’s proposals..

Uhuru proposed several areas of taxation in his memorandum to the House and the Jubilee Party Parliamentary Group meeting on Tuesday at State House. He pleaded with his brigade to support it.

Raila also led his troops at Orange House to support the government. CS Rotich has robustly defended the cuts.

However, despite entreaties, defiant MPs from both Jubilee and the opposition pledged to vote against the President.

The proposed halving of the VAT rate on fuel has left the government with a funding shortfall, hence the cuts in spending.

Kenya’s economy is expected to grow by six per cent this year, recovering from a drought, slowdown in lending and election-related worries that cut growth in 2017, but investors and the IMF have expressed concerns over growing public debt.

Documents sent by Uhuru to Parliament ahead of the sitting underscored the debate in government over how to boost revenues without hurting the poor.

Uhuru is trying to reinstate several tax measures struck out by parliament, including a two percentage hike on excise duty for mobile phone money transfers to 12 per cent.

Kenya’s biggest mobile phone operator Safaricom said in June it was opposed to any tax rise on mobile phone-based transfers, arguing that it would mainly hurt the poor, most of whom do not have bank accounts and rely on services such as M-Pesa.

The President also asked parliament to double the excise duty on the fees charged by banks, money transfer services, and other financial institutions to 20 per cent.

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