Duty on basic food commodities zero-rated.
Written By:Maureen Wambugu , Posted: Thu, Jun 12, 2008
Finance minister Amos Kimunya exuded confidence that the budget presented on Thursday has no financial gaps.
Kimunya said the government would prioritise infrastructure development as a measure to reduce the cost of doing business in country and to spur development and growth of other sectors.
Presenting the first budget estimates of the grand coalition government, Kimunya allocated 65 billion shillings for the rehabilitation, construction and expansion of the road network.
The 127 billion shilling overall deficit has been bridged through grants, loans, infrastructural bonds and domestic borrowing.
The minister also announced plans for an international bond to the tune of 33 billion shillings to cover road network, the energy sector and ICT infrastructure development.
Kimunya said the government-deferred issuance of the bonds that had been scheduled for the beginning of 2008, due to the post election crisis that rocked the country early this year.
The measure will ease pressure on the domestic market.
Pointing out that the current high global oil prices are likely to weaken demand for Kenyan exports due to cost factors, Kimunya said the country must diversify to cheaper energy sources.
He announced plans to step up reforms for electricity generation, and a 4 billion shillings allocation for Geo-thermal energy development, an additional 300 million shillings for solar energy.
Biomass, wind and other energy sources are due to be developed.
Stressing the role of the Energy sector as a pillar of growth, the minister has allocated 6.8 billion shillings for the rural electrification programme to cater for grid extension to schools, health facilities and market centers.
Bread, wheat and rice, which are some of the basic food commodities for most Kenyans have been zero-rated.
In his presentation of the budget estimates for the 2008/09 financial year, Finance minister Amos Kimunya said exempting the commodities from duty will reduce the cost of living and cushion Kenyans against rising food prices.
Duty on wheat has been lowered from 35 per cent to 15 per cent.
The price of beer and liquor has been increased by two shillings, and that of cigarettes by five shillings.
Members of parliament who have been enjoying allowances tax-free now join the taxation bracket.
The new adjustments take effect from Thursday night.