President William Ruto on Thursday announced that he is going to overhaul the country’s income tax regime and introduce reforms.
According to his reforms high-earners will have to pay more in a bid to reduce inequality.
“We are overtaxing trade and undertaxing wealth,” President Ruto told parliamentarians. He said intended to establish a progressive income tax regime.
British charity Oxfam said in a report earlier this year that the two richest Kenyans own more wealth than the bottom 30 percent of the population.
“I am committed and determined to ensure that our tax system is responsive to the needs of the economy,” he said.
“The economic principles of equitable taxation require that the tax burden reflects ability to pay.”
Ruto also promised to rein in borrowing to kickstart Kenya’s economy, which is creaking under the weight of a $70-billion debt mountain.
East Africa’s most dynamic economy is facing deep hardship with about a third of the country’s population of around 50 million living in poverty.
Prices for basic goods skyrocketed in the wake of Covid-19 pandemic and the war in Ukraine, and unemployment remains a major problem, particularly among the young.
Inflation soared to a 65-month high of 8.5 percent in August, while the Kenyan shilling has hit record lows at around 121 shillings to the US dollar.
Ruto, who was deputy to former president Uhuru Kenyatta, had a bitter falling-out with his boss while in office, lambasting his policies for increasing debt.
Ruto last month slashed the food and fuel subsidies introduced by Kenyatta.
President Ruto has asked financial institutions to come up with a credit model that will allow small businesses to access affordable loans.
He said it is possible for Mama Mboga and Boda Boda to enjoy low interest loans the same way big firms do.
“We must think beyond financial inclusion to a more accessible and affordable credit model. That way, small businesses will grow and drive our economy,” he said.
He noted that the Government is not against Credit Reference Bureau listing but its abuse and criminalisation.
“We are for a mechanism that instils financial discipline. The current CRB as it is is inhibitive; an in-out, all or nothing outfit,” added Dr Ruto.