Ruto's Plan To Tax Kenyans More Until The End Of His Term [VIDEO]

President William Ruto announced on Tuesday, May 14 the government's intention to impose additional taxes on Kenyans in an effort to address the country's debt distress.

Speaking at State House in Nairobi during a meeting with Harvard University students, Ruto emphasized his commitment to ensuring Kenya's financial sustainability and reducing reliance on loans.

He stressed the necessity for every eligible Kenyan to pay their fair share of taxes, revealing plans to increase the taxation rate from 14 per cent to 16 per cent by the end of 2024 and to 22 per cent by the end of his first term.

“I am not going to preside over a bankrupt country, I am not going to preside over a country that is in debt distress. We have to cut our spending," Ruto declared.

He defended his proposal by comparing Kenya's tax rates to those of other African nations, arguing that, “Kenyans have been socialized to believe they pay a lot of taxes, but empirical data shows that Kenya last year our tax was at 14 per cent. 

"Our peers in the continent are between an average of between 22 per cent and 25 per cent, our taxes are way below our peers."

Ruto's announcement comes on the back of the National Treasury announcing proposals for the Finance Bill 2024, which includes a variety of new taxes that have drawn backlash from both finance experts and the public.

The proposed taxes include a motor vehicle tax set at 2.5 per cent of the vehicle's value, a minimum top-up tax for multinationals with a gross turnover of Ksh106 billion, and a revised VAT on bread up to 16 per cent. However, reports indicate that Ruto later directed the Treasury to shelve the VAT increase on bread to mitigate the high cost of living.

Meanwhile, the President underscored the importance of these tax increases as part of a broader strategy to boost the country's revenue and reduce borrowing, further acknowledging the economic burden on Kenyans but argued that the long-term benefits would justify the increased taxes. 

“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 borrow from the World Bank is savings from other countries,” revealed Ruto.

In his engagement with Harvard Business School’s Class of 2025, Ruto reiterated his commitment to fiscal discipline, stating, “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 dismissed the perception that Kenya's taxes are high compared to the region, explaining that, “Our peers in the continent are on an average of between 22 and 25 percent which means our taxes are way below those of our peers.”

President Ruto's remarks highlight his administration's intent to implement sweeping changes to the Value Added Tax (VAT) system, significantly impacting the cost of various commodities.

The Finance Bill 2024 suggests eliminating VAT exemptions for several financial services and enforcing a mandatory tax for all motor vehicle owners, demonstrating the government's efforts to fund the 2024-2025 budget.

Photo of the National Treasury buildings. /NATIONAL TREASURY