Tax suspension, curfew and executive pay cuts among President Uhuru new measures against Covid -19 .

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The president of the republic of Kenya called the ongoing Covid -19 pandemic an unprescended global health crisis due to its widespread tentacles that has so far reached 184 countries, infected over 400,000 and killed over 16,000 people around the world.

On the national front, the president applauded the ministry of health for its management of the crisis,confirmed that three new cases had been found bringing the national tally to 28 with zero deaths and one recovery.

Cognizant of the anxiety enghlfling the minds of Kenyans particularly on what the future holds and the likelihood of loss of jobs and income, the president ordered a raft of measures to be undertaken to cushion the public from economic blow back already being experienced as a result of Covid -19 pandemic.

The measures aimed at protecting both employers and employees from economic meltdown by increasing the amount of disposable income in the economy included :

1. 100 % Tax Relief for persons earning gross monthly income of up to Ksh. 24,000.

2. Reduction of Income Tax Rate (Pay-As-You-Earn) from 30% to 25%.

3. Reduction of Resident Income Tax (Corporation Tax) from 30% to 25%;

4.Reduction of the turnover tax rate from the current 3% to 1% for all Micro, Small and Medium Enterprises (MSMEs);

5.Appropriation of an additional Ksh. 10 Billion to the elderly, orphans and other vulnerable members of our society through cash-transfers by the Ministry of Labour and Social Protection, to cushion them from the adverse economic effects of the COVID-19 pandemic;

6. Temporary suspension of the listing with Credit Reference Bureaus (CRB) of any person, Micro, Small and Medium Enterprises (MSMES) and corporate entities whose loan account fall overdue or is in arrears, effective 1st April, 2020.

7. immediate reduction of the VAT from 16% to 14%, effective 1st April,2020;

The presidential further directed the following.

1. That all Ministries and Departments shall cause the payment of at least of Ksh. 13 Billion of the verified pending bills, within three weeks from the date hereof. Similarly, and to improve liquidity in the economy and ensure businesses remain afloat by enhancing their ca

2. That the Kenya Revenue Authority shall expedite the payment of all verified VAT refund claims amounting to Ksh. 10 Billion within 3 weeks; or in the alternative, allow for offsetting of Withholding VAT, in order to improve cash flows for businesses.

3. That Ksh. 1.0 billion from the Universal Health Coverage kitty, be immediately appropriated strictly towards the recruitment of additional health workers to support in the management of the spread of covid-19

4. In order to share the economic burden during the crisis, the president said that the executive arm of the government top ranks had agreed to reduction in their salaries as follows.

1 The President & Deputy President – 80%;
2 Cabinet Secretaries – 30%;
3 Chief Administrative Secretaries – 30%;
4 Principal Secretaries – 20%

The president also urged state agencies to establish and implement frameworks for staff to work at home. Of particular interest were pic servants aged 58 years and above who the president ordered to be given leave or be made to work from home due to their low chances of survival should they contact the virus.

The president also noted the measures outlined by the Central Bank of Kenya in order to protect the country’s economy from total collapse, the measures included :

a) The lowering of the Central Bank Rate (CBR) to 7.25% from 8.25% which will prompt commercial banks to lower the interest rates to their borrowers, availing the much needed and affordable credit to MSMEs across the country.

b) The lowering of the Cash Reserve Ratio (CRR) to 4.25 percent from 5.25 percent will provide additional liquidity of Ksh. 35 Billion to commercial banks to directly support borrowers that are distressed as a result of the economic effects of the COVID-19 pandemic.

c) The provision of flexibility to banks with regard to requirements for loan classification and provisioning for loans that were performing as at March 2,2020 and whose repayment period was extended or were restructured due to the pandemic.

To supplement all the above measures, the president announced that beginning 27th March 2020 a nationwide curfew will be in effect starting from 5AM to 7PM for the next 15 days. The curfew will however exclude critical and essential service providers.

The President urged people to observe social distancing, wash their hands, avoid shaking hands and keep off crowded places. He further directed the National Coast Guard to take charge of all operations of Kenya Ferry Services to ensure that Covid -19 prevention measures are strictly adhered to.

John Otieno

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