President William Ruto has indicated that Kenyans should brace themselves for tougher times with plans to raise the country’s average tax rate from 14 percent to 16 percent by the end of this year.
During an engagement with the Harvard Business School’s Class of 2025 students on Africa’s trade and investment potential at State House, Nairobi on Tuesday, the President defended his proposal, stating that it forms part of a broader strategy to boost the country’s revenue and reduce dependence on borrowing.
In fact, President Ruto plans to further raise the tax rate to between 20 and 22 percent by the end of his term in office.
“My drive is to push Kenya, possibly this year we will be at 16% from 14%. I want in my term, God willing, to leave it at between 20 and 22 %. It’s going to be difficult, I have a lot of explaining to do, people will complain but I know finally they will appreciate that the money we go to borrow from the World Bank is savings from other countries,” Ruto said.
According to the Head of State, Kenya’s tax rate remains low compared to other countries, refuting the perception that Kenya has higher taxes in the region.
“Nilikuwa Nimewawarn”
He also mentioned that he had warned Kenyans to tighten their belts when he assumed office.
“When I came into office I told everybody to tighten up your belts… I am not going to preside over a bankrupt country… I’m not going to preside over a country in debt distress. We have to cut our spending. And there is no free lunch,” he said.
Additionally, he noted, “Kenyans have been socialised to believe that they pay the highest taxes but empirical data shows that as of last year, our tax as a percentage of our revenues was 14 %. Our peers in the continent are on an average of between 22 and 25 percent which means our taxes are way below those of our peers.”
Ruto further clarified, “And I’m not comparing ourselves with OECD countries. Countries like France are at 45% others are higher. So I persuaded and made a case to the people of Kenya that we must begin to enhance our revenue because if we are a serious state we must be able to enhance our taxes.”
