Recent demonstrations in Nairobi against the Finance Bill 2024, which will lead to an increase in taxes, have underscored widespread concerns among citizens about financial burdens coming from the government. However, understanding the fundamental reasons for taxation highlights its essential role for Kenya and other African nations.
Taxation is pivotal for financing essential services and infrastructure development in Kenya and across Africa, including vital sectors like education, healthcare, security initiatives, and public administration.
In Kenya, tax revenue supports the improvement of schools and hospitals, the maintenance of public safety through police and security services, and the operation of government offices that provide essential services to citizens.
Moreover, the need for increased taxation often arises from addressing fiscal challenges such as high public debt and budget deficits. These measures aim to bridge fiscal gaps, reduce borrowing, and foster sustainable economic management, ensuring that funds are allocated efficiently to benefit society as a whole.
In March 2023, President Ruto pledged to ramp up tax collection over the next two years while curbing excessive commercial borrowing in favour of cheaper sources like the World Bank, to reduce debt servicing pressures.
Efforts to broaden the tax base are critical due to Africa's diverse economies, with significant informal sectors contributing substantially to GDP but often evading taxation.
Over the past two years, the Kenya Kwanza government has strategically aimed to boost tax revenue by encouraging formal sector participation and cracking down on tax evasion.
Strengthening tax compliance through streamlined procedures has been prioritised, alongside introducing targeted fiscal policies to stimulate economic growth while ensuring fair contributions to public finances.
These initiatives demonstrate Kenya Kwanza's commitment to enhancing fiscal stability and funding essential development goals through effective and transparent revenue mobilisation strategies.
Taxation is inevitable as the revenue generated this way plays a pivotal role in promoting economic growth and development across Africa, providing stable funding for long-term initiatives like infrastructure, education, and healthcare reforms crucial for sustainable development goals.
Furthermore, taxation fosters accountability between citizens and governments, ensuring responsible use of funds to benefit society and strengthen democratic governance while mitigating corruption risks. The only challenge comes when citizens see corruption or wastage and poor utilisation or tax money.
Since the Kenya Kwanza government took office, significant action has been taken to combat corruption. The Executive Office of the President has worked to curb graft in public offices by; enhancing transparency in public procurement processes, empowering anti-graft agencies, and promoting a culture of accountability within government institutions.
Initiatives to digitise government services and transactions have been introduced to minimise opportunities for corrupt practices. These efforts underscore a firm commitment to rooting out corruption at all levels and ensuring that taxpayer money is used effectively for the country's development and progress.
The Kenya government has been taking cogent measures to deal with corruption among its ranks. Initiatives such as strengthening anti-corruption laws, enhancing transparency in public procurement processes, and empowering anti-graft agencies demonstrate a resolute commitment to rooting out corruption at all levels.
Additionally, fostering a culture of accountability and integrity within government institutions and promoting public awareness with the SEMA project almost being rolled out to show the detrimental effects of corruption, all are integral parts of this ongoing effort. These concerted actions aim to restore public trust, safeguard public resources, and promote equitable socio-economic development across the country.
The budget-making process in Kenya is a critical aspect of fiscal governance requiring greater public understanding and participation. It involves several stages, beginning with the National Treasury formulating the Budget Policy Statement (BPS) to guide budget estimates.
Public participation is integral, incorporating consultations with stakeholders and civil society organisations to ensure transparent and inclusive budget priorities and allocations.
The presentation of budget estimates to Parliament by the Cabinet Secretary for Finance initiates thorough review and debate by parliamentary committees, culminating in mandatory approval of the budget and Finance Bill before implementation.
Subsequently, budget implementation by government ministries and agencies is overseen by the Controller of Budget to ensure compliance with financial regulations, with audits providing feedback on budget performance and fiscal accountability.
Dennis Itumbi recently called on protesters to be released and instead a meeting organised for them with the Chair of Budget and Finance Committee in Parliament to explain the dynamics to them.
President Ruto addressing a Kenya Kwanza Parliamentary Group at State House also expressed pleasure that Kenyans are engaging in reasoned discussions on issues. Simplifying the budget-making process for Kenyans is crucial, and so is explaining to them deeper why taxes have to be increased at the moment.
Again, clear communication on how public finances are managed and allocated ensures informed citizen participation in fiscal decisions affecting their lives. Recent protests in Nairobi and Mombasa reflect public discontent with rising taxes, aggravated by inadequate communication on these issues.
While protests against tax increases reflect valid concerns about affordability and economic hardships, taxation is fundamental for economic stability and development in Kenya and Africa.
Transparent management of tax revenue is essential for building resilient economies, reducing dependence on external aid, and achieving sustainable development goals—priorities consistently emphasised by the President in addressing national debt challenges.
Promoting public awareness and understanding of taxation and the budget-making process is crucial for fostering informed citizenship and effective governance in Africa's pursuit of prosperity. It is imperative that Kenyans witness tangible progress in major projects and quality delivery of services. Recently, the Head of Public Service urged all government ministries, departments, and Agencies to enhance their customer care standards and called on Permanent Secretaries to make time to meet with citizens seeking their assistance.