President Ruto has signed the Finance Bill into law initiating tax rises that are not popular with the public.
The tax rises are sadly necessary as Kenya has been operating a budget deficit for years. The national debt rose from $12 billion to $7o billion between 2013 and 2022. Someone has to pay. It is impossible to improve services and cut taxes.
However the employees in the formal sector are paying most of these tax rises including the housing levy, increased NHIF and NSSF, and higher PAYE. These formal sector employees are carrying too heavy a burden.
The exception is Value Added Tax which is paid by all Kenyans. VAT is normally considered 'regressive' meaning that it hurts the poor more than the rich since it is based on consumption.
But VAT is still the best way to collect taxes from the informal sector, from those who remain outside the KRA system.
The Finance Act increases VAT on fuel from 8 to 16 percent. All Kenyans will pay this directly or indirectly through increased transport charges. This will be painful but at least everybody will pay, not just the over-burdened 'white collar workers'.
Quote of the day: "The art of leadership is saying no, not saying yes. It is very easy to say yes."
Tony Blair
He resigned as British Prime Minister on June 27, 2007
