William Ruto defends tax policies as the best way to develop the country

President William Ruto during the burial of Mukami Kimathi, the widow of Mau Mau freedom fighter Dedan Kimathi at Njabini ,Nyandarua County on May 13, 2023. [Joseph Kipsang, Standard]

President William Ruto defended his policies and the controversial Financial Bill 2023 as the best means for Kenya to rise from the ashes.

Despite the widespread criticism surrounding the Financial Bill 2023, Ruto passionately defended his policies as the catalyst to lift the country from its current state and propel it towards a brighter future.

Speaking during an interview with journalists from different media houses at State House yesterday, the president deflected any criticisms around the performance of his administration.

Ruto insisted that some of his publicly challenged decisions such as the establishment of an inflated Executive were necessary to ensure his government actualised its plans.

The president argued that Kenyans were not highly taxed "compared to its peers such as South Africa, Morocco... Ruto's long-term plan is to increase taxes slowly every financial year to support essential public services.

Giving an example of member countries of The Organisation for Economic Co-operation and Development (OECD)-an international organisation that works to build better policies for better lives- such countries are taxed a percentage of their Gross Domestic Product (GDP) ranging between 22 and 34 per cent.

"Are we overtaxed, that is the question we need to ask," said Ruto. "Kenya is at 14 per cent... Meaning we are paying half, in terms of tax, of what our peers in our continent have been paying."

"In fact, if we were to match our peers... by God's grace, maybe next year we will be at 18 per cent... Maybe like that, because we have to be realistic," added the president.

Ruto argued that criticism around taxation is failure to understand the reality of the situation and that it is through a practical tax policy that the country can be able to live itself from its current economic predicament.

"If we do not pay taxes, we cannot be like the countries we want to be. If we want to be in their shoes. We can't be going backwards."

In a shrewd and calculated manner, the president chose to ricochet questions calling on accountability, especially where his government missed the mark such as increased spending. He instead chose to detail the work he had done in the eight months he has been in office.

Defending his new tax strategy Ruto argued that the rationale behind reducing taxes is to eliminate loopholes and promote integrity in the financial system.

"We have carefully analysed our tax structure and made strategic adjustments. For instance, while we have increased VAT on certain products by 8 per cent, we have simultaneously slashed taxes such as the 3.5 per cent on the Fuel development levy.

"We have imposed taxes on imported fish, imported furniture, imported steel, imported salmon because we want to grow our own manufacturing capacity."

Public debt

Ruto acknowledged the substantial public debt which he says stands at around Sh8.8 trillion.

He emphasised the need to manage this debt, arguing that his government has slashed public borrowing and is focusing on other methods to generate revenue.

"By growing our own manufacturing capacity, we create jobs. We create opportunities for work and we build our own manufacturing capacity using our own products."

Ruto said the current borrowed funds will not pay off existing debt but will be invested in productive sectors such as agriculture and manufacturing. "The objective was to increase manufacturing's contribution to GDP from 7 per cent to 15 per cent within five years and 20 per cent by 2030."

On the Housing Fund debate -the proposal requiring employees to contribute three per cent of their basic salary to the National Housing Development Fund and another three per cent from employers - the president argued that the move is a win for the government and Kenyans.

"The six per cent coming from you and your employer is not a tax but all of it is your money. That is the money that we will use to build affordable housing for the common mwananchi," said Ruto.

Splitting the development in social housing and affordable housing, Ruto argued that social housing will be for persons who currently live in slums such as Kibra and Mathare who pay a minimum of Sh2,500.

The president said that such people will be able to pay the same amount for houses that accord them dignity and come with basic amenities such as electricity and running water.

For Kenyans who feel that the fund should not be compulsory, Ruto said that those who are employed "have a duty."

"What's your loss? If you don't want a house, we will return your money with interest," said Ruto.

The president further argued the programme will also be critical in providing much-needed employment at a time when millions of Kenyan youth are employed.

"If you can pay rent of Sh5,000 why not pay the same for the mortgage and own the house? In the process you would have helped your country and helped those other people who pay your salary," said Ruto.

With opposition coming from Azimio leader Raila Odinga and Public Service Unions to the Finance Bill 2023 and the tax policy, the president maintained that he has a plan and that his administration should just be given time to deliver on its promises.