Friday, September 15, 2023 – Prime Cabinet Secretary Musalia Mudavadi had a very rough time defending President William Ruto on taxation.
During an interview on Bloomberg, Mudavadi was hard-pressed to explain Ruto’s decision to increase taxes despite the existence of other options to raise government revenue.
In her questions, the Bloomberg TV interviewer wondered that aside from taxes, the Kenyan government had the opportunity to privatize state firms and increase their revenues in the process.
“Part of this idea of tax hikes being put on to target the debt policy. Why do it now at a time when the Kenyan Government has other options, for example privatising state-owned firms to really generate the growth of the company?” Posed journalist Kriti Gupta.
In response, Mudavadi argued that since the state was moving away from relying on debt, there was a need to raise its own revenue.
He, however, observed that privatization of state firms would take a longer time to realise and without the tax enforcement, the state would be left in a tough fiscal shape.
“Fiscal consolidation requires that we actually live within our means and the privatization programme is going to go on in parallel. But getting the private sector in terms of privatization takes quite a bit of time. It is something that we must run in parallel with other measures.
“Clearly, we do not have the fiscal space that one would expect us to have and, therefore, we will have to raise some of the revenues locally. Part of these involves not just raising taxes in specific areas but also making sure there is less pilferage when it comes to tax collection.”
In Ruto’s first year, a slew of new taxes have already been implemented with the aim of increasing state revenues.
For instance, beginning July 2023, all formally employed Kenyans now part with 1.5 percent housing levy to deliver the affordable housing project as well as digital economy tax.
At the same time, the state raised the value-added tax on fuel from eight percent enjoyed during Uhuru Kenyatta’s regime to 16 percent.
The Kenyan DAILY POST.