Kenya targets the rich to shore up revenues in 2013/14 budget

Nairobi – Kenya will look at ways to enforce a capital tax gains as it seeks to shore up revenues in the face of ever-growing demands for cash to fund an expanded government and development projects, its minister of finance said yesterday.President Uhuru Kenyatta, who took up the helm of east Africa’s biggest economy in April, has vowed to lift 10 million people out of poverty and to support a new devolved system of government that created 47 new local government units.Henry Rotich, the cabinet secretary for the national Treasury, said the government has initiated a review of the capital gains tax to formulate ways for its effective enforcement.“This will allow wealthier members of our society to also make a token contribution toward our national development agenda,” he told lawmakers in his budget speech for the 2013/14 (July-June) fiscal year.In the budget, the minister set the fiscal deficit at 7.9 per cent of the gross domestic product or sh329.7b ($3.9b), slightly higher than markets expected.He said the gap would be filled by net foreign financing of sh223b and sh106.7b net borrowing from the domestic market.Razia Khan, Africa analyst at Standard Chartered in London said the deficit was on the high side of expectations, even though the announced spending was broadly in line with consensus expectation.“Despite the scaling up of foreign financing of the budget, the domestic borrowing requirement will not fall very significantly,” she said.Rotich said the governments expects 2013 growth at 5.8 per cent rising to over 7 percent in the medium term, from 4.6 percent in 2012.Inflation was expected to remain around 5-7 per cent target over the period ahead. Kenya’s inflation rate fell to 4.05 per cent in the year to May.

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Kenya targets the rich to shore up revenues in 2013/14 budget