Relief as President Uhuru Kenyatta rules out additional taxes

Kenyans could be spared additional taxes next year following a presidential directive barring introduction of new levies by any agency.

Blocking new taxes could provide major relief for millions, who are increasingly ceding a bigger portion of their income to national and county governments, and their agencies.

"I am therefore going to insist that we have no increase in the overall Government tax in the next financial year. I direct that every State agency seeking to increase its tax must demonstrate to my office the need for the change and commensurate benefits," President Uhuru Kenyatta said in an address from State House yesterday.

An increased number of public-funded projects were likely to translate into more taxes in the next financial year, especially after the State announced that it would relax borrowing to ease the ballooning national debt that is currently over Sh2 trillion.

But the directive from State House has averted any such plans by the National Treasury, whose top officials now have to find an alternative avenue for raising funds, including eliminating tax leaks.

Uhuru gave the directive, as part of a much longer list that seeks to pacify citizens, following revelations of massive wastage and graft in Government in the recent months that culminated in the resignation of Devolution Cabinet Secretary Anne Waiguru on Saturday.

"I am of the mind, fellow Kenyans, that we in Government should take better care of your money before we ask you for more taxes," he added.

In the National Youth Service scandal for instance, more than Sh791 million had been siphoned and an additional Sh650 million was at risk. It is such losses of national resources that have angered the public, leading to the interventions by President Kenyatta.

Kenyans are already among the most taxed in the world, owing to the huge demand for resources to fund the national budget.

Taxes on income are levied on a graduated scale of up to 30 per cent, while most products and services attract a 16 per cent value added tax.

Imports are also charged at varying rates, depending on the existing policy designed to protect local industries. Excise duty is levied on products that are deemed to be non-essential such as cigarettes, beer and motor vehicles.

In just 10 years, the size of the budget has grown nearly five-fold to the current Sh2.2 trillion.

Heightened investment in infrastructure projects, effectively translating to more taxes, are ultimately borne by the citizens.

Various Government agencies levy different fees while it is the Kenya Revenue Authority that collects resources for the national Government.

Resources raised by the KRA are shared between the national and county governments.

The new legislation introduced more taxes on some products this year. The State hoped to raise about Sh64 billion from water, soda, beer and cigarettes, a move that has impacted on individual and household budgets.

Uhuru hit out at KRA's employees for the third time in a month, directing lifestyle audits for the staff who are feared to be abetting tax leakages.