Ruto wants all citizens above 18 years taxed

President William Ruto has defended his call for the public to pay taxes as the government moves to ramp up revenue collection in its race to meet a Sh6 trillion collection target by 2027.

The move has seen the government through Kenya Revenue Authority (KRA) to embark on tax reform measures that could see every Kenyan above 18 years brought into the tax bracket.

Speaking during an interdenominational prayer service in Kenol, Murang’a county, yesterday, the President said he would like to create a more independent country that does not have to depend on external borrowing.

Only two days earlier, during a ceremony to recognise top tax payers, President Ruto questioned why there were only seven million people with a KRA Personal Identification Number (PIN) yet there were over 30 million users of the mobile money transfer platform, M-Pesa.

This appeared to suggest that the government would use a digital strategy to net more tax payers.

Despite the new push to get more people to be registered for taxation, the President said he has held talks with the taxman on how to approach the issue, saying no one will be harassed as it has been done before.

“We need to pay taxes so that we can get resources for development projects and also be able to repay the debt that we have as a country,” he said yesterday.

“We intend to cut on borrowing but we must increase the revenue we collect to be able to undertake development.”

The President said he intends to emulate Kenya’s third president, the late Mwai Kibaki, who managed to increase tax revenue fourfold, from Sh250 million to Sh1 trillion annually.

At present, the taxman collects about Sh1.88 trillion in taxes annually, slightly above half of what the Treasury budgets for expenditure every year.

For every Sh100 the government collects, about Sh60 is spent on debt repayment. Much of the rest is spend on recurrent expenditure, such as salaries for State and Public officers.

Raising tax revenue is expected to give the government more legroom to engage in development investments while reducing reliance on foreign debt.

Expansion of infrastructure

For instance, the Central Bank last week invited Kenyans to invest in a Sh60 billion bond to fund expansion of infrastructure, including roads and power supply.

“We have room for growth and this can only be achieved if we all comply in paying taxes,” the President said, a call repeated by his deputy, Rigathi Gachagua, who also said it was possible to increase revenue collection without having to victimise business owners.

KRA is under pressure to expand tax collection by issuing every adult Kenyan with a PIN, which would make every adult citizen eligible to pay taxes.

This is part of President Ruto’s new measures to ensure that the authority — which he has also proposed should be renamed Kenya Revenue Service — collects more to meet the governments annual target.

The new administration, which came to power mid last month, is seeking to grow its own source revenues and stop over-reliance on foreign loans to finance its Budget deficit, which stands at about Sh1.2 billion when grants are excluded.

President Ruto now wants the number of Kenyans with a KRA PIN matched with the number of mobile money transfer customers.

“There are only seven million people with KRA PIN. In the same economy, Safaricom’s M-Pesa has 30 million registered customers, transacting billions daily. The fact that this opportunity remains unclear to KRA demonstrates why radical changes are necessary,” Ruto said on Thursday last week as he renewed his call for tax reform.

And while in Kitui last week, the President said Kenya spends Sh1.4 trillion annually to pay external loans and this is taking a huge chunk of the money, which could otherwise be channeled to development.

Whereas KRA collects slightly less than Sh2 trillion annually, he wants to raise this to Sh3 trillion the end of this Financial Year in June, 2023.

“If Mama Mboga is paying Sh50 per day at the market, there is no reason why every other person should not pay the tax,” Ruto said last week, pledging that all companies associated with him will similarly pay their taxes. KRA has been on the spot in the past few weeks as the President and his allies raised pressure on it to use technology to ensure all eligible taxpayers are signed up. Already, KRA has rolled out a programme to register all landlords and landladies in Nairobi with a view to compelling them to pay tax on rental income.

President Ruto has also indicated that there were gaps in revenue collection, saying large amounts of money were going into the pockets of individuals rather than tax coffers. This, he said, raised the need for streamlining revenue collection by sealing such loopholes.

And in Kenol yesterday, the Head of State said he would like to create an independent country that would not have to rely borrowing to fund government programmes.

Cut on borrowing

“We need to pay taxes so that we can get resources for development projects,” he said. “We intend to cut on borrowing but we must increase the revenue we collect to be able to undertake development.”

Ruto urged the public to dismiss calls by leaders urging them to boycott paying taxes, saying such calls were misleading.

Opposition-allied politicians last week said raising taxes would also lead to a higher cost of living yet, when Ruto and Kenya Kwanza Alliance were campaigning ahead of the August election, they promised to bring down the cost of living.

To justify his calls for tax reforms, Ruto yesterday said he intends to set new development record by ensuring that no part of Kenya will be left behind.

“I am going to elevate this country to a new level through development projects which are going to improve the livelihoods of the people,” he promised.

DP Gachagua also backed his boss, saying the government was committed to reviving the economy.

He, too, criticised political leaders calling for a tax boycott, accusing them of seeking to sabotage the government and ensure it does not deliver on its pre-election pledges.

Gachagua said the government has delivered on some of its promises among them the gradual reduction in the prices of flour, cooking oil and cooking gas.

“I urge the public to have faith in us to steer this country to greater heights,” he said. “We just need a little more time and everything shall fall into place because we are determined to deliver quality leadership and services.”