Kenya: President Ruto Says Tax Waivers ‘Frozen’ As Govt Moves to Avert Debt Distress

Nairobi — President William Ruto has urged against requests for tax waivers saying the government had “stopped” issuing waivers due to pressing development needs.

Ruto who is seeking to expand annual revenue collections to Sh5 trillion by 2027 as part of efforts to tame debt said “other alternatives” should be considered before waiver requests.

“This waiver matter is a difficult one. With all these development initiatives it will be difficult to finance our programs if we take that route,” Ruto stated.

He was responding to an appeal during an interdenominational church service on Sunday.

Kenya’s annual revenue collections currently stand at Sh2 trillion with the country having crossed the Sh2 trillion mark in July 2020 when the Kenya Revenue Authority (KRA) reported a Sh2,031 trillion collection for Financial Year 2021/2022.

KRA had posted Sh1.7 trillion in the preceding year.

The agency which Ruto is proposing to rename the Kenya Revenue Service (KRS) had its initial target of Sh1.88 trillion revised twice to Sh1.91 trillion and Sh1.98 trillion.

Revenue to GDP ratio

Despite it being considered a monumental achievement being the first time KRA was exceeding its target in fourteen years, Ruto has consistently maintained Kenya’s revenue collections are not commensurate with its economy.

“Countries in the middle-income category raise 20-25 per cent of their GDP from. In Kenya, we are at 14 per cent,” Ruto argued in November 2022.

President Ruto defended the campaign to seal loopholes in tax collection as part of an elaborate plan to ease Kenya’s debt burden with more than half of tax revenue currently spent servicing loans.

He subsequently rolled back on government subsidies on fuel terminating the aid program under his predecessor President Uhuru Kenyatta as tantamount to subsidizing consumption.

The Energy and Petroleum Regulatory Authority (EPRA) has since dropped subsidies on petrol and moved to cushion diesel consumers, predominantly used in industries, with a cross-subsidy supported by super petrol users.

Government has maintained a Sh25.13 a liter subsidy for kerosene to cushion households without access to electricity.

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