U.S. Ambassador to Kenya Meg Whitman has seemingly expressed reservations about President William Ruto’s plan to increase Kenya’s tax rate from 14 percent to 22 percent by the end of his term.Speaking on Citizen TV’s JKLive Show on Wednesday, Whitman stressed the importance of taxation consistency in fostering a stable economic environment in Kenya.
“Taxes are an issue in every country and what we hear in American companies is that Kenya just needs to be the lowest taxed but consistent; keeping the tax the same for three, four, or five years because businesses make investments with a return horizon,” she said.
“You don’t expect that you are going to make your money back in a year but five years, six years, seven years; so that tax consistency is just equally important.”
Addressing methods of increasing taxes, Whitman advocated for expanding the tax base through job creation rather than raising tax rates.
“There’s two ways; to increase taxes and also expanding the tax bases which is the number of people (being taxed) and that’s why jobs, jobs are so important. Good paying jobs, with a steady paycheck and some benefits
“When more people have a steady income they can pay taxes so you expand the number of people and not just go for the same people.”
On Thursday President Ruto defended the government’s plan to levy additional taxes on Kenyans, stating that it is part of a broader strategy to enhance the country’s revenue and reduce reliance on borrowing.
The Head of State noted that he intends to raise the country’s average tax rate from the current 14 percent to 16 percent by the end of this year and to a rate of between 20 and 22 percent by the end of his term in office.
While acknowledging the economic burden Kenyans will have to bear to achieve this target, Ruto emphasized that the long-term benefits will 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 go to borrow from the World Bank is savings from other countries,” he said.
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