National Treasury Cabinet Secretary (CS) Prof. Njuguna Ndung’u has explained that the Kenya Kwanza government has not introduced any new tax deductions.
Speaking on Wednesday, November 30, Prof. Ndung’u emphasized that nothing has changed in regard to the taxes levied by the government.
“Nothing changed, they are the same level. The only tax that was adjusted was the fuel tax because that component was been taken by the oil industry,” said Ndung’u.
Further, the CS stated that people are complaining about new taxes, yet they can’t event point them out.
Prof. Ndung’u maintained that the government has not imposed new taxes and the complaints are because ‘new taxes’ is the in word in town.
“Let us be clear on facts, because essentially if you ask someone honestly, which taxes are you talking about? How did they change? They don’t even know. We have not changed anything,” he said.
Besides, the CS who was replying to a question on small and medium businesses, said Kenyans should budget with their disposal income and not the gross income.
“I didn’t say the taxes are justified but I can tell them that it is important to pay taxes if they want to get services,” said Ndung’u.
Government Market Plans
He explained that the government is planning to develop different markets in the country including sugar, tea, coffee, and milk.
Also, Prof. Ndung’u said the government must regulate the markets just to make sure that they are following the rules.
“The market is important to the bottom-up economic agenda because it is in the marketplace where economic rent is generated and distributed,” he explained.
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In addition, he stated that when the markets are is working the economy becomes vibrant.
However, the CS insisted that the government has no other way to generate resources except through taxation.
“Government can only finance development through domestic resource mobilization, part of that is actually taxation,” said Ndung’u.
However, he explained that the government will ensure that the taxes are predictable and do not distort the market.
“If you tax to a point where you affect the demand structure then you start losing the game,” he said.
For this reason, Prof. Ndung’u said he will analyze the situation because the government must also support the market and by avoiding over taxation.
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Why We Must Tax- Njuguna Ndung’u
The CS explained that the required expenditure to Gross Domestic Product (GDP) is about 24% and the country is at about 15.8% leaving a huge gap.
In addition, he said that the government targets to move to 18% or 19% of the GDP to reduce the gap.
“Just imagine if you have that gap and we are complaining about taxation what will close that gap? You can only borrow, but can you borrow for consumption? No, you will be killing yourself,” he said.
Ndung’u was speaking during an interview with Spice FM journalists on the state of the economy.
