President says increased taxation pulled country from brink of debt

President William Ruto during Jamhuri Day Celebrations 2023 at Uhuru Gardens in Nairobi on December 12, 2023. [PCS]

President William Ruto has defended his administration over excessive taxes levied on Kenyans amid hue and cry.

Dr Ruto said that the introduction of new tax policies in the last year was necessary and was geared towards pulling the country from the brink of debt distress.

He was speaking on Tuesday during the Jamhuri Day celebrations at Uhuru Gardens.

Shortly after being sworn into office, President William Ruto through the Finance Bill, 2023, introduced a raft of tax measures amid an economic crisis and surging resistance.

Key among them was the doubling of VAT tax on fuel to 16 per cent from an earlier 8 per cent and a 1.5 per cent Housing tax on all salaried Kenyans. 

Others included raising the income tax from the current 30 per cent to 35 per cent for those earning Sh500,000 and above and a three per cent turnover tax on businesses making more than Sh1 million per year.

On Tuesday, in his Jamhuri Day speech, Ruto termed the tax policies as necessary sacrifices which would put the country on the path of economic renaissance.

“Together, we have made the right choices, sometimes taken very difficult and painful decisions, to steer Kenya back from the edge of the catastrophic cliff of debt distress, and move our nation in a new direction,” said Ruto.

The Head of State noted that without the sacrifices, the crises, threats and challenges in the global economic and geopolitical environment confronting Kenya would have overwhelmed as was the case with other countries.

“We have had to make our contribution to the struggle for the nation’s economic sovereignty. We have had to cut back significantly on expenditure and defer the implementation of critical development programmes to stabilise our economy,” he added.

According to the president, the sacrifices have now paid off and “Kenya is safely out of the danger of debt distress and its economy is on a stable footing.”

This, he said, is evidenced by the economic indicators which show that inflation is now at 6.8 per cent, down from a high of 9.2 per cent last year.

Ruto also observed that in the last six months, the country’s GDP has grown 5.4 percent, making Kenya the 29th fastest-growing economy in the world, according to the World Bank.

And to further ensure economic prosperity, the President urged his administration to leverage the human capital comprised of an innovative, smart-working, professional labour force which is the country’s single-most potent arsenal.

This, as he acknowledged that not much progress had been made on the economic front compared to gains in the democratic and political journeys.