U.S. Ambassador to Kenya, Meg Whitman, has broken her silence about plans by President William Ruto to increase Kenya’s tax rate from 16% to 22% by the end of his term.
Speaking on Citizen TV on Wednesday, Whitman explained that the government has two methods of raising revenue: increasing taxes and expanding the tax base.
“There are two ways: to increase taxes, I think he said from 16% to 22%, and also expanding the tax base, which is the number of people,” she said.
Whitman advised President Ruto to create more jobs before increasing taxes. According to the ambassador, this will allow more people to pay taxes instead of the government collecting taxes from the same individuals.
“That is why jobs are so important, good-paying jobs with a steady paycheck and some benefits, where more and more people have a steady income and can pay taxes. So, you expand the number of people, not just go after the same people,” Whitman explained.
Meg Whitman on Tax Consistency
Besides, Meg Whitman emphasized the importance of taxation consistency in stabilizing Kenya’s economy.
“Taxes are an issue in every country and what we hear from American countries is that Kenya needs to be lowest tax but consistency, keeping the taxes for two or five years because business make investments with the return horizon,” she said.
“You don’t expect to get your money back in a year but five, six or seven years so that tax consistency is equally important.”
Whitman said the government should prioritize creating jobs in technology and manufacturing especially for the Kenyan youth.
“I think manufacturing is such an important part of any economy because the number of employees per dollar of revenue of a tech company is relatively small compared to the number of employees per dollar of revenue of manufacturing company,” Whitman said.
Also Read: Kenyans Asked to Give Views on Proposals to Slap Taxes on Bread & M-Pesa
Ruto Taxation Plans
President Ruto revealed plans to raise the country’s tax rate to 22% by the end of his term.
Speaking on May 15, Ruto said Kenya’s taxes are below its African competitors which is between 22% and 25% on average.
“So, 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%,” Ruto said.
Also Read: KRA Faces Potential Loss of Ksh1.7 Trillion in Uncollected Taxes- Auditor General
He revealed that the country has been running a deficit of between 8% and 9% for the last ten years and cannot continue borrowing more loans.
“The whole principal is that you must live within your means, this has been my message to Kenyans. You keep digging a bigger hole to fill the other one and now we have a debt heading towards unsustainable,” he said.
Ruto said Kenyans now understand the motive behind the government’s taxation scheme.
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