President Ruto Vows To Increase Taxes From 14% To 22%
President William Ruto outlined a plan to increase tax collection in Kenya, aiming to raise the average tax rate from 14% to between 20-22% by the end of his term. This strategy aims to lessen dependence on borrowing and achieve fiscal responsibility.
Ruto acknowledged the burden on Kenyans but believes long-term benefits outweigh the initial strain. He explained that relying on loans from institutions like the World Bank is essentially spending other countries’ savings.
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The President emphasized living within Kenya’s means and cutting unnecessary spending. He addressed the perception of high Kenyan taxes, stating that neighboring countries have a higher average tax-to-revenue ratio (22-25%).
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Ruto highlighted the need for a serious state to have a strong tax base. His comments come amidst proposals for a revamped Value Added Tax (VAT) system, impacting various goods and services.
Potential Tax Changes:
- Increased bread prices due to VAT implementation (previously exempt)
- Mandatory tax for all vehicle owners
- Removal of VAT exemptions for specific financial services (credit/debit card issuance, money transfers, cheque handling)
These proposals aim to fund the 2024-2025 budget.
