In the post June
2024 protests, the Finance Bill is
considered successful not just on the amount of revenue it collects but also
its ability to balance fiscal responsibility with economic growth, investor confidence and social
legitimacy.
The Finance Bill 2026 is a very cautious yet very sophisticated Bill in its drafting.
Clearly, a smart brain drafted it. Its focus is on
expanding the tax base, tightening compliance through intelligent digital
monitoring and closing the loops in revenue collection.
Classical tax administration modernisation; this deserves our commendation for it underscores a simple yet profound principle in tax justice. The solution to Kenya’s revenue challenge lies not
necessarily in taxing more but in skillfully collecting what is already due.
Prof Vincent Ongore of TUK likes to say that by
broadening compliance, the government can
potentially reduce the burden on honest taxpayers while improving public
finances. To stimulate investment and create jobs, the Bill has placed emphasis on tax amnesties, VAT
exemptions for selected medical products, electric vehicles
and agricultural inputs.
This will send positive indicators to investors and
retain confidence at a time when our economic climate continues to be volatile
due to impending presidential elections.
In times such as these, targeted fiscal incentives
are a critical policy tool.
As the globe re-adjusts to global energy supply
shocks due to the blockade of the Strait of Hormuz, building macroeconomic resilience and stability is
an imperative. To this end, the Bill, in its measures to encourage compliance, will see us sustain stable public finances which
would lead to lower borrowing costs for creditors and would not mark us as a
volatile market.
It will also lead to a stronger or generally stable
currency, which will ultimately enhance public and investor
confidence in the Kenyan economy.
The lack of dramatic tax increases is a signal that
the duty bearer appreciates that economic reforms must be grounded in public
legitimacy.
The enduring take-home of the Bill is the acknowledgement by the Treasury that we
must always strike a balance between raising revenue and protecting household
purchasing power.
This is a brilliant attempt to recalibrate our
economic management.
Kidi Mwaga, the convener of the Inter-Parties Youth Forum, spoke to the Star
