I Will not Preside Over a Bankrupt Country, Ruto Says Raising Tax Target to 22% of Revenue

Ezra Manyibe | 1 week ago
File image of President William Ruto. |Courtesy| PSCU|

President William Ruto has doubled down on his move to restructure the country's taxation into a stable revenue earner and dial down on external borrowing.

Speaking during an engagement with the Havard Business School Class of 2025, the head of state revealed that he intends to raise the current tax rate from 14 per cent to 16 per cent of the country's total revenue by the end of the year.

While acknowledging the burden the move will bestow upon Kenyans, President Ruto stated that the wisdom of the measures will soon be appreciated. 

By the end of his term, the president intends to raise the tax target to between 20 and 22 per cent of total revenue.

“My drive is to push Kenya, possibly this year we will be at 16% from 14%. I want in my term, God willing, to leave it at between 20 and 22 %. It's going to be difficult, I have a lot of explaining to do, people will complain but I know finally they will appreciate that the money we go to borrow from the World Bank is savings from other countries,” he said.

President Ruto reiterated that his administration will work to ensure Kenya lives within her means, dismissing the notion that Kenyans are overtaxed.

“When I came into office I told everybody to tighten up your belts... I am not going to preside over a bankrupt country... I'm not going to preside over a country in debt distress. We have to cut our spending. And there is no free lunch,” he said.

"Kenyans have been socialised to believe that they pay the highest taxes but empirical data shows that as of last year, our tax as a percentage of our revenues was 14 %. Our peers in the continent are on an average of between 22 and 25 per cent which means our taxes are way below those of our peers.

“And I'm not comparing ourselves with OECD countries. Countries like France are at 45% others are higher. So I persuaded and made a case to the people of Kenya that we must begin to enhance our revenue because if we are a serious state we must be able to enhance our taxes," he added.

Ruto's sentiments come at the back of the Finance Bill 2024 which has elicited mixed reactions from members of the public. The bill proposes an increase in Value Added Tax (VAT) to basic commodities like bread which would increase prices.

The bill further proposes the introduction of a motor vehicle circulating tax which will be paid upon issuance of vehicle insurance covers. Kenyans will be required to part with 2.5 per cent of the vehicle's worth as tax, capped at a minimum of Ksh5,000 and a maximum of Ksh100,000.

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