By Faith Mutheu
The famous ‘mama mboga’ and ‘boda boda guy’, who were once the face of the Kenya Kwanza regime, have, in recent times, been reduced to nothing but whispers – reflections of an unfed eagerness and lost hope in a Kenya for all classes. The skillfully crafted narratives of plentiful employment through the bottom-up economic pyramid have proved elusive.
A haunting reality shrouds the nation of Kenya. The nightmare of poverty looms large, casting a dark shadow upon the dreams and aspirations of millions of individuals. Current statistics paint a grim picture, revealing the depths of the crisis. Recent reports show that approximately 36.1% of Kenyans live on less than a dollar – the international poverty line – indicating that many of us cannot meet the most common basic needs. And, amid the hue and cry of Kenyans, the passing of the Finance Bill 2023 spoke volumes about just how far the government is from reality.
A reading of the Finance Act, 2023 clauses has caused both condemnation and resignation to fate because of how much the government is asking of taxpayers with commensurate growth in employment or services. The doubling of the fuel levy is among the biggest controversies in the Act. By that single provision, Kenya has joined the league of countries collecting the highest taxes on fuel, calculated as a percentage of the final price, overtaking bigger economies such as the US and South Africa.
According to a recent study by the Business Daily, taxes now account for 40 percent of the cost of every litre of super petrol and diesel in Kenya, compared to 14 percent in Illinois State— the state with the highest fuel taxation in the US— and South Africa at 30 percent. Ethiopia does not tax fuel. And although Tanzania has the cheapest fuel in the region, the ratio of taxes as a percentage of the pump price ties with Kenya at 40 percent. Kenya charges a total of seven levies and two taxes on fuel.
President William Ruto defended the decision to double VAT despite it having triggered a fresh surge in the cost of living, given that Kenya’s economy heavily relies on diesel. “We are not overtaxing ourselves. But to balance it out, as we add eight percent on the same fuel, we have removed the Railway Development Levy (2.0 percent) and Import Declaration Fee (3.5 percent).
The weight of all the increased fuel tax and other expenses, such as the housing levy, promises to add to taxpayer burden, further driving up living costs.
There are some good aspects of the Act. It, for example, makes provisions to uplift the jua kali industry, although the predicament of the countless young individuals armed with degrees and diplomas still traversing the terrain of the job market with little hope needs to be addressed. While sectors like Education and Health have substantive allocations, most of the allocated funds will go towards recurrent expenses, and very little is made for research and improvement to improve standards. When this is the case, grandiose projects such as the affordable housing program overshadow the positive strides made elsewhere – like taking a step forward and taking two backwards.
What is more, the informal sector in Kenya has always been able to avoid paying taxes by hiding revenue from the government. Getting them to pay their fair share of taxes is difficult but not impossible – but can only be achieved by addressing corruption, which allows small-scale businesses to bribe KRA and government officials and thus avoid paying taxes.
Ruto’s proposed new taxes have earned him the unwanted nickname of “the tax collector”. He seems determined to squeeze any and every penny he can out of Kenyans, including those not due to his government. Paying taxes, as has been said and cannot be repeated too often, is not the problem for Kenyans; it is the amount paid as a proportion of income, and relative to the cost of living.
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