Bloomberg Corners Prime Cabinet Secretary Mudavadi over increase in taxes
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International media channel, Bloomberg hard press Prime Cabinet Secretary Musalia Mudavadi on why Ruto administration was 'indiscriminately' increasing taxes
International media channel, Bloomberg hard press Prime Cabinet Secretary Musalia Mudavadi on why Ruto administration was increasing taxes.
On Wednesday, Prime Cabinet Secretary Musalia Mudavadi was challenged to explain why President William Ruto chose to hike taxes when there were other ways to enhance government revenue.
The interviewer for Bloomberg TV questioned whether, in addition to collecting taxes, the Kenyan government had the chance to privatize state-owned businesses and boost their revenue as a result.
“Part of this idea of tax hikes being put on to target the debt policy. Why does it now at a time when the Kenyan Government has other options, for example privatizing state-owned firms to really generate the growth of the company?” Posed journalist Kriti Gupta.
Mudavadi responded that the state needed to generate its own revenue as it was moving away from relying on debt.
However, he pointed out that it would take more time to complete the privatization of state-owned businesses, and without the enforcement of taxes, the state would find itself in dire financial straits.
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“Fiscal consolidation requires that we actually live within our means and the privatization programme is going to go on in parallel. But getting the private sector in terms of privatization takes quite a bit of time. It is something that we must run in parallel with other measures.
“Clearly, we do not have the fiscal space that one would expect us to have and, therefore, we will have to raise some of the revenues locally. Part of these involves not just raising taxes in specific areas but also making sure there is less pilferage when it comes to tax collection.”
A number of new taxes have already been enacted in the first year of President William Ruto’s administration with the intention of raising state revenue.
For example, as of July 2023, all Kenyans with formal employment are required to pay a housing charge of 1.5% to fund affordable housing projects and the digital economy tax.
The state also increased the value-added tax on petrol from the eight percent it had been under Uhuru Kenyatta’s regime to sixteen percent.
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