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2007
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0:12
From: Kenya Imagine
Read This Entry & More At Kenya Imagine
Taxation is premised on the exercise of sovereign legislative authority. Elected representatives lay down the general policy and legal framework for taxation in all democratic societies in line with the celebrated maxim of “no taxation without representation.” "In this world nothing can be said to be certain, except death and taxes." -Benjamin Franklin, 1789. Parliament is supposed to be the embodiment of the sovereign will of the people and the personification of their collective legislative wisdom. Whereas there is a general consensus amongst ordinary people that everybody, including Members of Parliament and other Constitutional office holders should pay tax, our MPs and Judges of the High Court think otherwise. Want more?
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10:53
From: bankelele
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9:17
From: bankelele
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2:17
From: bankelele
Read This Entry & More At bankelele
Unit trusts In all the political news this week, some may have missed this story on collective investment schemes (funds, unit trust), who will now have to get more aggressive (take on more risk) to deliver commensurate returns - and are now asking the regulator (CMA) to relax some of the rules that restrict their investments. A year ago this post discussed unit trusts and the cost of investment being a major deterrent to the returns they offer (and at the time the NSE was in a much better position). I still have issues with the 3 – 5% initial fee and 2% annual fee charged by many unit trusts. Real estate The post-election violence will have a mostly negative impact on property values and in rural Kenya, and in towns like Eldoret, Kisumu, Nakuru and especially in Mombasa (where the real estate boom was driven by visitors/tourism numbers). The cost of building will also go up as demand for supplies will be great. So buy cement company shares (Bamburi, ARM, Portland) the day Kofi Annan succeeds in his mediation efforts In Nairobi, properties near slums like Ayany (adjacent to Kibera) have been badly affected owners and/or tenants moving out. However there is also increased demand in some of the same areas – perceived to be safer parts of the city, such as Kileleshwa and Westlands. They will also benefit from residents of other towns like Kisumu relocating to Nairobi. These are also the areas that many Diaspora Kenyans have invested in or are considering investing; and while many have postponed their real estate investment decisions, those already in (with mortgages to pay) will have to wait out the storm. Also it may be wise to set up several investment companies to keep rental turnover and sidestep new tax lawsAlso Kasarani which is one place you can still buy land cheaply to build, will have values of land increasing as will parts of Central Kenya.
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7:05
From: bankelele
Read This Entry & More At bankelele
In 2003, Transparency International - Kenya published a booklet (PDF here) as a result of a survey they had carried out on Kenyan parliamentarians and the burden of dealing with (paying for) constituents needs – mostly though giving funds It’s useful to look back on it at a time when the same parliamentarians want to increase their salaries again (because they can and will) the survey consisted of 8th parliament – expenditure of 7 MP's and questionnaire of about 20 others The survey was done before Constituency Development Fund (CDF) and the last salary increase (2003) and found that; - Of their (then) Kshs. 395,000 gross salary, MP’s typically took home less than 50,000 - 2/3 of those surveyed claimed to spend between 200,000 and 300,000 pr month of their salary i.e. ½ to 2/3 – and it’s interesting that for those who TI tracked, they projected that their expenses would exceed their salary & expected income (TI did not pursue this point) - Reasons for giving funds: to get re-elected got 3X as many responses as to help people. Longevity in parliament is maintained by being generous to constituents - Ominous point for Kenya, most - over 2/3 of elections are not closely contested i.e. the winner gets double the votes of the loser signifying the importance of being in the right party. This places the burden on party nominations (see ODM-K, NARC, NARC-K, Shirikisho, Ford K....) which are often not observed, and are less free & fair - TI Kenya defended the MP's - asking for them to get higher remuneration (to ease the stress and deficits brought on by their constituents requests) and also supported CDF (at that time was only a proposal) But the latter is self defeating because the more the public knows that MP’s have increased their salary, only makes them ask for more from MP’s. Now today, MP’s have CDF, get funds to set up office in their constituencies, control funds for school bursaries, are off the hook from free primary education (and soon secondary), and have almost doubled their salary from before the survey. But CDF also helps voters decipher useless MP's who can no longer lie to them that the government was denying them resources to do A, B, C. CDF reduced 'problem solving' but not all since most MP's giving to their constituents consists of individuals and harambees. So MP's will increase their salaries, because they have to - and can.
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10:21
From: bankelele
Read This Entry & More At bankelele
6.5 to 7% economic growth expected in 2007/08 and the budget will focus on strengthening the financial sector, reducing the cost of doing business, enhanced productivity and fixing infrastructure.
Some measure mentioned in the budget speech today (only heard 1/2 of it) include:
alcoholduty up on spirits, wine and some beer
auto spares Reduce import duty 25 to 10% for oil filter, but with increased excise duty on imported used spares
Banks minimum share capital increased from 250 million to 1 billion (over the next 3 years) and benchmarks will be set up to be adhered to
battery to protect local battery companies, a duty imposed on imported recycled batteries
Cigarettes tax up
east African investors get the same treatment as Kenyans, - i.e. withholding tax of 5% on dividends and improved allocation chances (will be treated same as Kenyan in pool expanded form 25 to 40%)
energy rural electrification to be continued as mini grids will be set up in large towns. 8 billion has been allocated to deal with (anticipated?) energy shortages so they don’t hamper manufacturing processes and the government will also complete the oil pipeline to Uganda and refurbish the refinery at Mombasa (even though other shareholders have refused to chip in)
Educationincreased funding for free secondary education, implement increased teacher salary agreement and hire 7,000 new teachers
hawkers 400m to be spent to construct a market for them in Nairobi
ICT 1 billion ($15 million) for TEAMS which is expected to be completed in mid-2008. Also a national fibre optic network will be in place to reduce the cost of communications. In addition a 200m ($3m) endowment fund for innovation and research will be set up and the private sector invited to top it up.
insurance companies minimum share capital raised. For Long term (50m to 150m), general (100m to 300m) and composite from (150m to 450m) – within 3 years.
leasing: Zero rate leasing of some equipment and removal of withholding tax requirement
licenses for businesses - eliminate 205, reform 371 others
Medical equipment duty removed
milkZero rate milk powder to promote local processing and value addition
mineral water tax imposed
police 25,000 new officers to be hired
plastic bags tax imposed while thin plastic bags are banned to improve the environment.
Privatization 36.1b shillings ($0.5 billion) expected from privatization: Telkom Kenya (get a strategic partner this month), Safaricom IPO on the NSE, more shares sold of Kengen (when price corrects) and National bank [these shares could be offloaded to 3rd parties and not through the exchange]
Pyrethrumextracts are zero rated to promote local insecticide production
real estate duty exemption for developed of low cost housing (but not in slums). Also pension savings can now be used as security for home loans (not just as down payment)
retirees monthly pension benefits will be exempt from tax. Also social security will accept voluntary contributions from those whose employers don’t take part
sugar development levy removed from imported industrial sugar
textiles removed import duty
trade import duty reduced from 2.75% to 2.25% for all goods from all outside east Africa and none from within east Africa
transportation removed TLB from non passenger commercial vehicles,
Tourism 2 million visitors expected this year and as benefited the local air and hotel sectors. Will develop eco and lake tourism and will create resorts in Mombasa, Turkana and Isiolo.
universities (private) duty removed on goods and services supplied to them
VAT refunds to speed up refunds (which business community has complained about), will become automatic for those companies with a proven track record
women a 2 billion shilling ($30 million) women enterprise fund to be set up – starting with 1 billion this coming year, and call on corporates to assist the fund.
youth fund allocation increase by 250m to 1.25 billion with a goal of taking it to 2 billion
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