Experts Want Kenya Kwanza to Curb Insatiable Tax Appetite

The fiscal policy proposals of the Kenya Kwanza administration have faced criticism for their heavy reliance on taxation as a means of generating revenue.

At Bomas of Kenya, the National Dialogue Committee convened an open discussion on the rising living costs with economic experts as panellists. Those on the committee voiced consensus on tax hikes, overestimated budgets, and deficient Foreign Direct Investment (FDI) as the cause for soaring costs. The committee gleaned input from several specialists in relevant fields among them being Controller of Budget Margaret Nyakang'o, Chief Executive Officer of the Institute of Economic Affairs Kwame Owino, and officials from the Parliamentary Budget office.

The committee, led by Wiper leader Kalonzo Musyoka and National Assembly Majority leader Kimani Ichung'wah heard from experts who raised concerns about the negative impact of increased VAT and excise duty on the spending power of Kenyans. Nyakang'o expressed concern that low-income earners, comprising the majority of Kenyans, are unfairly burdened by the current tax structure. There are fears that this could worsen the existing economic crisis. The committee also discussed President William Ruto's overseas trips and their potential effect on Foreign Direct Investment (FDI).

Based on the expert analysis, the President's travels abroad won't contribute significantly to FDI, especially given the current economic instability. The Parliamentary Budget Office officials shared a sombre forecast, citing how larger economic players in the area are thriving due to infrastructure investments, and steady political conditions with noticeable progress in infrastructure-based projects such as railways and gas plants. Dr. Martin Masinde, the acting director of PBO, attributed the depreciation of the Kenyan shilling to excessive reliance on imports and limited exports.

To combat these challenges, Mr. Owino from the Institute of Economic Affairs suggested implementing tax reliefs, VAT exemptions, subsidies on essential goods, and increased social protections. Additionally, he proposed the elimination of the housing levy and a nationwide school infrastructure program to ensure equal resource distribution and create employment opportunities. Mr Owino also called for a reduction in unnecessary spending by both national and county governments.