Ruto proposes tax hike amid criticism

President William Ruto speaking during the African Heads of State Summit at KICC, Nairobi. [Samson Wire, Standard]

President William Ruto has outlined plans to incrementally increase Kenya's tax rate, aiming for a rise from the current 14 percent to 22 percent by the end of his presidency.

The initial step, according to Ruto, involves elevating the tax rate to sixteen (16) percent in the upcoming financial year.

“My drive is to push Kenya to a possible 16 percent this year, from 14 percent. I want in my term, God willing, to leave it at between 20 and 22 percent,” said Ruto.

During a meeting with visiting Harvard Business School students at State House, Nairobi, Ruto addressed concerns regarding heightened taxation and escalating government expenditure.

Rejecting claims of over-taxation, the president referenced empirical data indicating that Kenya's tax-to-revenue ratio stood at 14 percent last year, lower than the 22 to 25 percent average among African counterparts.

“Kenyans have been socialised to believe that they pay the highest taxes. Empirical data shows that Kenya, as of last year, had a fourteen percent tax as a percentage of revenue. Our peers on the continent average between twenty-two and twenty-five percent,” he said.

He clarified that he wasn't drawing comparisons with OECD nations like France, which maintains a 45 per cent tax rate.

Ruto stressed the necessity for fiscal discipline, advocating for living within the country's means despite potential backlash.

He pointed to positive economic outcomes such as currency stabilization and debt alleviation resulting from unpopular yet strategic decisions. "Those currently dissenting will eventually applaud," said Ruto.

The President's remarks coincide with ongoing discussions surrounding the Finance Bill, 2024, which proposes additional taxes on various goods and services, including bread, mobile money transfers, alcoholic beverages, and motor vehicles.

The legislation, already under parliamentary review, aims to bolster state revenue towards the targeted Sh2.9 trillion mark, despite anticipated resistance from taxpayers.