Why Kenya’s president wants people to love the taxman

Kenyans are learning the truth of the old adage that taxes – along with death – are the only two certainties of life. This is because President William Ruto is trying to convince them that they should hand over more of their hard-earned cash, saying that, if anything, they are under-taxed. He recently argued that Kenyans have “been socialised to believe they pay the highest taxes” when in fact, he added, the overall tax burden was lower compared to some other countries in Africa and beyond.

“We must be able to enhance our taxes,” he said, but acknowledged that it was “going to be difficult”. Since he was elected president in August 2022, Mr Ruto’s government has raised a host of taxes while also introducing new ones. Taxes on salaries have gone up, the sales tax on fuel has doubled and people are also paying a new housing levy and are due to pay more for health insurance.

Mr Ruto’s message is that if people want better public services and a reduction in the country’s debt burden then they have to pay up. But many are angry. The imposition of some of the new taxes, amid the rising cost of living, led to deadly street protests last year. Today, ordinary conversations are often dominated by the pain of taxation, and the president’s view has exasperated Kenyans who already feel overburdened.

Mr Ruto said that last year government tax revenue amounted to 14% of the value of the economy as a whole, a figure that is known as the tax-to-GDP ratio, whereas the number for Kenya’s “peers in the continent is on average between 22% and 25%”. This “means our taxes are way below those of our peers”, the president insisted.

However, it was not exactly clear which countries he meant by “peers”. While it is true that South Africa, Morocco, Mauritius and Namibia all have tax-to-GDP ratios close to or higher than 20%, many others, including Nigeria, Ghana, Uganda, Tanzania and Zambia, do not.

According to an African Union report, in 2021 the average for the continent as a whole was 15.6% – not much higher than Kenya’s. Opposition figure and lawyer Miguna Miguna summed up the incredulity that many felt.

“Kenyans are overtaxed, repressed, exploited and abused,” he posted on X, formerly Twitter, adding that people “don’t receive even 1% worth of value from our taxes!”

Despite the uproar, more taxes will be coming – the president has made a case for increasing taxes in the next couple of years to at least a 20% of GDP by the end of his term in 2027.

Source BBC