Debt burden has forced tax rises

In Summary

• The Ruto government plans to push through a raft of tax rises in its next Budget

• The public debt rose from $12 billion to $72 billion under the last government

Treasury building
Treasury building
Image: FILE

The latest Budget proposals introducer a raft of measures that will not be popular with 99 percent of Kenyans - raising the top rate of income tax to 35 percent, a housing levy of 3 percent, more excise duty on imported goods, et cetera.

These tax rises were unavoidable. The national debt rose from $12 billion to $72 billion under the last government. The government is struggling to pay its debt. The last Kenyan Eurobond is trading at 21 percent of its face value - the market considers a debt default by Kenya to be a real possibility.


These tax rises and the subsidy cuts will bring government closer to balancing its books. Citizens cannot be expected to welcome them but they can at least understand their necessity.

The Ruto government may be front-loading the bitter reforms necessary to rebuild public finances. They may plan to do the unpopular stuff in the first year and then undertake some popular measures in the fourth year to ensure re-election.

However, the government should sympathise with the wananchi. Let's phase in the tax rises gradually so that the pain does not come all at once.

Quote of the day: "Another white man's trick! Let me go! Let me die fighting."

Crazy Horse
Lakota chief surrendered to US troops on May 6, 1877.

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