In his address to the state on Wednesday evening, President Uhuru Kenyatta announced a number of moderate to radical measures as his government sought to cushion Kenyans against adverse economic effects of the coronavirus pandemic.
The president ordered the national Treasury to, through parliament, to effect various tax relief changes.
President Kenyatta also announced 100% tax relief for Kenyans earning less than Sh24,000, PAYE reduction from 30% to 25%, VAT from 16% to 14%, among other measures to increase disposable income. The measures will take effect from 1st April, 2020.
The president reduced corporation tax from the current 30% to a new 25% provision.
He equally ordered the appropriation of sh. 10 billion to the elderly and orphans through the Cash Transfer Program to be administered by the Ministry of Labour.
VAT rate was reduced from 16% to 14% with effect from 1st April, 2020.
The president also ordered KRA to actualize verified VAT refunds to the tune of sh10 billion within three weeks. Alternatively, KRA could offset withholding VAT.
The measures also captured a decrease on the turnover tax from the current 3% to 1% for all micro, medium and small enterprises.
To improve liquidity in the economy, the president ordered various government agencies through the national Treasury to cause the payment of sh13 billion in pending bills in three weeks’ time.
CBK has already lowered CBR to 7.25 per cent from 8.25 per cent and lowered cash reserve ratio so as to provide additional liquidity of Sh35 B to commercial banks.
The president also ordered a suspension of credit reference bureau (CRB) listing starting of 1st April, 2020.
The president announced that he, and his deputy, will take 80% pay cut; Cabinet secretaries and Principal secretaries to take a 30% cut and CASs to take a 20% pay cut.
All state and public officers with pre-existing medical conditions and above 50 years ordered to take leave or work from home except those in security services.
The president also directed the allocation of sh1 billion for the recruitment of healthcare workers.
Faced with the dilemma of announcing a lockdown, as was expected in some quarters, the president ordered a daily curfew from 7pm-5am in Kenya, starting Friday, with all unauthorized movement prohibited.