Kenyans Face Increased Taxes Under President Ruto’s Economic Plan

Kenyans are grappling with rising taxes as President William Ruto argues they are under-taxed compared to other countries. Despite protests and widespread discontent, Ruto is pushing for more taxes to improve public services and reduce national debt. However, many feel overburdened and question the efficiency of tax collection and government spending.

Kenyans are coming to grips with the reality that, as the old saying goes, taxes and death are the only certainties in life. President William Ruto is advocating for higher taxes, arguing that Kenyans are actually under-taxed compared to other nations.

President Ruto recently claimed that Kenyans have “been socialized to believe they pay the highest taxes” when, in reality, the country’s overall tax burden is lower than that of some other African countries. “We must be able to enhance our taxes,” he said, acknowledging the difficulty of the task. Since taking office in August 2022, his administration has raised various taxes and introduced new ones. Salaries, fuel, housing, and health insurance have all seen tax hikes.

Ruto’s message is clear: better public services and a reduction in Kenya’s debt require higher taxes. However, this stance has sparked anger among citizens. Last year, the introduction of new taxes amid rising living costs led to deadly street protests. Conversations across Kenya are dominated by complaints about the heavy tax burden, and many feel exasperated by the president’s views.

President Ruto stated that last year’s tax revenue was 14% of the country’s GDP, compared to 22-25% in some other African countries. However, it is unclear which countries he refers to as peers. While countries like South Africa, Morocco, Mauritius, and Namibia have high tax-to-GDP ratios, others like Nigeria, Ghana, Uganda, Tanzania, and Zambia do not. An African Union report from 2021 indicated the continent’s average tax-to-GDP ratio was 15.6%, not much higher than Kenya’s.

Opposition figure and lawyer Miguna Miguna voiced the frustration of many Kenyans. “Kenyans are overtaxed, repressed, exploited, and abused,” he posted on X (formerly Twitter), claiming that people receive little value for their taxes. Despite the uproar, President Ruto aims to increase taxes to at least 20% of GDP by the end of his term in 2027, to boost revenue and reduce borrowing.

Kenya’s national debt stands at nearly $80 billion, much of it inherited from previous administrations. “The last regime went on a borrowing spree. Our regime is balancing, paying off debts, and regenerating the economy,” said government spokesman Isaac Mwaura. The government’s budget proposal for the next financial year includes unpopular measures like a mandatory tax for car owners and sales taxes on bread and financial transactions.

Economist Odhiambo Ramogi argues that the focus on the tax-to-GDP ratio is misguided. He believes that inefficient tax collection and poor governance, leading to wasted state spending, are the real issues. Ramogi points out that despite higher taxes, the tax-to-GDP ratio has fallen, suggesting tax avoidance is increasing. He references the “Laffer curve” theory, which posits that excessively high taxes reduce people’s incentive to work and pay taxes, leading to lower revenue.

Ramogi notes that countries with high tax rates typically offer good public services in return. In contrast, Kenyans still have to pay for services like education and healthcare, effectively facing double taxation. He advocates for better tax collection and utilization, and addressing corruption, which President Ruto claims to be tackling.

Ken Gichinga, CEO of Mentoria Economics, warns that higher taxes could backfire by raising business costs, leading to closures, job losses, and reduced income tax revenue. Economist and former MP Billow Kerrow also challenges Ruto’s logic, noting that a high tax rate does not necessarily equate to a strong economy, citing Nigeria’s low and South Africa’s high tax-to-GDP ratios as examples.

Despite widespread criticism, President Ruto remains determined. “I have a lot of explaining to do,” he said. “People will complain, but I know finally they will appreciate… We have to begin to live within our means.”

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