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Kenyans pray for reduced cost of living in budget reading

12 June 2014, 14:07 Victor Tinto

Nairobi - For majority of Kenyans, the budget reading by treasury secretary Henry Rotich will not mean much unless it heralds a reduction in cost of living.

When Rotich takes to the stage at parliament buildings this afternoon, many will have a keen eye on what the government will do to reduce the high cost of living.

According to sources, Rotich has already promised in his estimates that basic commodities will be spared from taxation, with the prices of milk, flour and other basic commodities likely to be reduced.

But it does not end there, with the rising cost of electricity, fuel prices and the soon to be implemented NSSF charges, Kenyans will be asking for more from the secretary.

" We need them to move on from the basic commodities aspect of the cost of living. The cost of electricity is high and will be higher. Fuel prices are also rising. We need those to be looked at, Isiah Omondi a Kibera resident told News24.

" Yes, they can reduce one aspect but as long as they keep the others higher, we will still suffer, he added.

It is likely, as was in Rotich's first budget reading last year that the alcohol and cigarette industry will bear the brunt of increased taxation to bear the burden of other sectors.

" It is likely that they will be targeted, Linus Omae, a financial analyst says.

For some, increased taxation and thus increased prices of commodities such as beer and cigarettes will be music to their ears.

" Increased taxation has been known to reduce exposure because of higher prices to the user and that will help reduce drug abuse, NACADA chair John Mututho feels.

But that in effect will still leave a huge hole to be filled.

The budget deficit which stands at close to KES 350 billion will need to be addressed and it will have a say in how living standards of the ordinary Kenyan are affected.

A reduced budget deficit also means much less local borrowing and reduction in interest rates.

" I hope they can do something about interest rates because they are a stumbling block to development. Less people are able to borrow and that stalls basic development of commerce, Omae adds.

For most Kenyans though, talk of budget deficits and interest rates do not apply to their lives. They just want to have a higher spending power.

In other African countries, legislation is in place to shield basic commodities from taxation, a route many feel Kenya should take.

But that is not what is on many's minds.

" At the end of the day for most Kenyans, the budget will be summarized in a few words; have the prices of basic commodities gone down?, Omondi adds.

That will be the question Rotich has to answer.

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