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CS Njuguna Ndung'u: Taxation is the government's only way to raise income

Treasury CS, PROF. NJUGUNA NDUNG'U spoke exclusively to Spice FM on how the Kenya Kwanza government is actualizing the bottom up agenda and whether the stiff taxation measures are justified. As transcribed By Silas Nyamweya:

Tell us about the government’s bottom-up agenda and how it ties with the issues we are facing as a county…

The focus of the agenda is starting from very low beginnings and that is why the government is quite active in developing both local and foreign markets.  We want to nurture those markets to the optimal level.  As you are aware, we are currently reviving the sugar industry, the coffee sector, tea, milk and even the housing market.   We are not only nurturing and supporting these markets but also protecting them to optimal level.

We are also regularizing the markets just to make sure it’s following the rules.

We understand the role of the markets in the economic transformation.  It is in the market where economic realms are degenerated and distributed.

Kenyans are complaining of excess taxation by the government…..

Taxation is the only way the government generates its income and this is important in providing satisfactory service to citizens.  The government has no other except generating resources from taxation.  Besides, we have a huge gap in GDP which can only be closed through taxation.

Even if borrowing could be an alternative to financing our countrys GDP, we cannot borrow for consumption.

However, the government is aware on the effects of over-taxation and so we are keen to keep this at the required level.

Previous administration and even the current one has been known for their penchant for borrowing… where do the borrowed money especially those meant for development go since the projects are not very much feasible?

We really need a forensic audit to understand how the Uhuru Led administration used the borrowed money.  This owes to the fact that since we are only one year into office, we are yet to determine an extensive audit to unravel all that and so we are unable to answer that question in a good structure.

Right now, we are paying for the past debts and the burden is hitting us so bad since we cannot default, we have to look for means of repaying them by all means possible.

How is the government justifying the current taxation measures against micro, small and medium enterprises and will these taxes help to grow their businesses?

I think it is not our work to tell these traders that the taxes are justified but what I can tell them is that its only important to pay taxes if you are looking for services.

Kenyans have to understand that why we are not getting the services we need such as electricity is that it’s because we have not invested enough.  But we are looking on how to optimize that gap, a journey we are currently taking up.

In actual sense, nothing much has changed in terms of taxation as compared with the previous government.  The only tax that was adjusted was the fuel tax because it was being taken away by the fuel industry which was claiming over 69% stake and that is why we had to close that gap.

If you revisit history, policies such as zero rating didn’t work.

If you ask people which taxes have increased or how they changed; nobody can tell you.

Nonetheless, we need to understand the need to tighten our belts so as to ride over these crises.

The president promised to cut down public spending last year and mandated the treasury to cut down the budget by three hundred billion shillings… yet we have seen an increased budget this year..

Yes, we managed to cut down the budget, but we found out that we had to compensate the budget gap to the tune of the same from the previous regime. We were actually desperate that what we were cutting was actually to compensate the carry over.

There is also the issue of interest cost which is constantly increasing on external debts alongside the depreciation of the currency. These have increased expenditure by a huge margin, the tune of 1.5 billion which was not anticipated when we prepared our first budget.

 

 

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