Prime Cabinet Secretary Musalia Mudavadi in Mombasa yesterday
By Our Reporter
Worth Noting:
- “I have continuously cautioned Kenyans to gird themselves for hard times now and in the near future. As government we do not want to lie and give false hope and promises. I am being pragmatic, realistic and forthright in my assessment, that resuscitation of the economy will take at least two years or thereabout,” said Mudavadi.
- He added: “We are working towards tightening the loose ends and sealing the loop-holes in procurement processes and procedures. The Finance Bill 2023 is proposing some fundamental measures that will help in addressing the bottle-necks that have been riddled by outrageous procurement processes where what you think has been procured cheaply turns to be very expensive in the long run.”
Prime Cabinet Secretary Musalia Mudavadi says It will take time and pain before the economy gets better.
Consequently, he has urged Kenyans to stop politicizing the Finance Bill 2023 saying it is part of fixing the sorry state of the economy.
Mudavadi made the remarks as he stated the government has to make tough decisions and that it will take time to remedy the economic situation in the country.
According to Mudavadi, it will be a little painful before it gets better as turning the current economic situation in the country could take about two years.
“The government has taken a bold step towards broadening the tax base so that we increase what we collect locally as revenue. This is the only way we will be able to boost agricultural sector operations, enhance food production and create jobs for us to stir the economic growth,” said Mudavadi.
He made the remarks in Mombasa when he presided over the 40th Annual seminar for Institute of Certified Public Accountants of Kenya (ICPAK).
Mudavadi urged Kenyans to remain steadfast as government is burning the midnight oil to ensure it corrects the drain, pain and strain on the citizen’s livelihoods.
“I have continuously cautioned Kenyans to gird themselves for hard times now and in the near future. As government we do not want to lie and give false hope and promises. I am being pragmatic, realistic and forthright in my assessment, that resuscitation of the economy will take at least two years or thereabout,” said Mudavadi.
He added: “We are working towards tightening the loose ends and sealing the loop-holes in procurement processes and procedures. The Finance Bill 2023 is proposing some fundamental measures that will help in addressing the bottle-necks that have been riddled by outrageous procurement processes where what you think has been procured cheaply turns to be very expensive in the long run.”
Given his previous experiences in government, Mudavadi said the question of Value Added Tax (VAT) has been mis-conceptualized and the finance bill 2023 should cure the problem once and for all.
“The Government has shifted its subsidy policy from consumption to production. The few beneficiaries on the consumption side are crying out loud. For the Government, the principle of majority beneficiary applies and through the Finance Bill, the Government proposes to provide exemptions under the VAT Act for fertilizers and inputs or raw materials locally purchased or imported by manufacturers of fertilizers. This will lower the cost of fertilizer, which will in turn lower the cost of production,” explained Mudavadi.
“We all know things went bad before Kenya Kwanza took over and are still bad as we speak today. This experience should prompt us to work together to mitigate the dire situation,” said Mudavadi.
He said the Government is deploying all the measures within its power to address the challenges and foster a resilient and inclusive economic recovery process.
“As government, we are not sleeping on the job. The commitment to prioritize the lives and livelihoods of Kenyans above all else is our key priority,” he affirmed.
He defended the government’s move to take hard, painful but strategic measures and decisions saying, the Kenya Kwanza administration wants to pick-up the can that was kicked down, since the previous regime thrived in postponing a problem rather that curing the mess.
“I raised the red flag a few years ago, that the kind of borrowing we were subjecting ourselves in as a country was going to wreak havoc on our economic stability, and now it has come to pass, someone kicked the can down the road and waited to see who will be the first person to pick the can and for sure as Kenya Kwanza administration, we have decided to pick the can early enough before it gets too late for us to fix the country’s economic base,” said Mudavadi.
“There is hope as no situation is permanent. We have to always work towards a better tomorrow, we have to work together in resuscitation of the economy and mitigate the dire situation,” he added.
Mudavadi explained that situation the country is in has necessitated the Government’s move to amend various laws relating to taxes and duties for the good of the nation.
“We are in a difficult position as a country. The government intends to raise about Sh60 to Sh70 billion from the 16 per cent VAT imposed on fuel and petroleum products. Where else, at this point, do we get the revenue now that the legroom for our external borrowing is largely constrained?” posed Mudavadi.
According to him, the previous government in the run-up to the 2022 general elections introduced fuel subsidies but never told Kenyans who was fundingit.
“They only hid themselves to pronouncement that VAT on fuel had gone down from 16 per cent to 8 per cent, which according to us was just postponing the problem.” said Mudavadi.
“Our tax debt portfolio stands at Sh1.5 trillion as we speak. This is tax that has not been paid to KRA, now KRA is looking for it and some is tied in tribunal and court cases and some through other dispute resolution processes and mechanisms that have not been finalized…How will we do project if we do not bring in more revenue as a country?” asked Mudavadi.
He regretted that some tax players are constantly using court processes to buy time and delay remittances to the tax-man.
“They always ensure that their bargain about taxes moves to court. We have to cure this menace and ensure everyone who is obliged and eligible to pay tax fulfills it as stipulated under the law and as part of the constitutional undertaking as a responsible citizen,” said Mudavadi.
Mudavadi was accompanied by the Principal Secretary for the State Department for Legislation in the Office of the Prime Cabinet Secretary Aurelia Rono.
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