No country can tax its way into true prosperity

Protestors block the Nairobi-Namanga road at Kitengela town during the fuel hike demonstrations. [Peterson Githaiga, Standard] 

Recent fuel protests have exposed something deeper than public anger over pump prices. They have revealed growing tension between the increasing fiscal demands of the State and the weakening productive capacity of the economy.

The issue is no longer simply taxation. It is whether Kenya’s current economic model is becoming increasingly extractive because it is insufficiently productive and increasingly disconnected from the lived realities of citizens.

Taxation is not inherently the problem. Functional states require revenue. Roads, healthcare, education, security, and public infrastructure all depend on taxation.

Citizens in many high-tax societies accept significant tax burdens because they also experience visible public value in return. Public healthcare functions, education systems work, and institutions appear responsive and fair. The deeper crisis emerges when taxation rises while reciprocity weakens.

In Kenya, many citizens increasingly experience the opposite dynamic. Taxes, levies, and fees continue to expand, yet households still return to their own pockets for essential services such as healthcare, education, security, transport, and even basic reliability in public systems.

The social contract begins to strain when citizens are repeatedly asked to sacrifice while simultaneously absorbing costs that functioning institutions carry.

At the same time, public calls for austerity increasingly collide with highly visible displays of State expenditure. Citizens are told the country must tighten its belt, yet they witness the rapid expansion of executive spending, visible luxury around power, and heavy political spending during electoral contests and mobilisation exercises. Whether justified or not, the perception that sacrifice is unevenly distributed weakens public trust further.

This tension is unfolding within a deeper structural problem. Kenya’s economy has not diversified sufficiently into high-productivity sectors capable of generating broad-based income growth.

Manufacturing remains shallow, energy costs remain high, informality dominates much of economic activity, and millions survive within low-productivity livelihoods that generate limited taxable value. Yet the demands placed on the formal economy continue to rise.

As debt obligations expand and recurrent expenditure grows, the State increasingly turns toward extraction through taxes, levies, fees, and administered charges.

Citizens then experience rising pressure without a corresponding expansion in opportunity. Taxation begins to feel less like a contribution toward shared progress and more like survival under pressure.

The fuel crisis illustrates this clearly because fuel affects nearly every layer of economic life. Transport costs rise immediately. Food prices respond quickly. Businesses adjust upward.

Inflationary pressures spread through the economy and rarely reverse proportionately, even when global prices stabilise.

What we are witnessing, therefore, is not simply resistance to taxation. There is growing anxiety about whether sacrifice is still connected to meaningful economic progress.

Countries sustain higher taxation most successfully when citizens can broadly see three things: expanding opportunity, functioning services, and restraint from leadership itself. Where those conditions weaken simultaneously, legitimacy also weakens.

Kenya’s challenge cannot therefore be solved through perpetual fiscal tightening alone. It requires rebuilding the productive foundations of the economy: lowering energy costs, deepening manufacturing, expanding exports, formalising growth sectors, and creating conditions where enterprise generates wider prosperity.

Equally important, it requires rebuilding public confidence that national sacrifice is being shared fairly across society, including by those who exercise power. Without that balance, taxation will increasingly be experienced not as shared nation-building, but as extraction.

-The writer is a consultant in policy and governance