Tax bosses reassure Kenyans

August 15, 2010

, NAIROBI, Kenya, Aug 15- The government has assured Kenyans that it will not arbitrarily increase taxes in the short term to finance the implementation of the new Constitution.

Finance Permanent Secretary Joseph Kinyua said through the Kenya Revenue Authority (KRA), the government hopes to improve its efficiency in tax collection and also widen its tax net.

“The government has no intention of increasing the tax rates because we believe that we still have a huge potential that we are not tapping at the moment. We are looking at ways of streamlining tax administration and I can assure that we will be able to generate more revenues,” he said.

There have been fears that Kenyans, who are already classified as some of the heavily taxed people in the world, are likely to shoulder a heavy tax burden once the implementation of the various legislations in the new document that among other things provides for the setting up of different commissions and other offices gets underway.

However, the PS hinted at the possibility of reviewing downwards some of the taxation such as Value Added Tax which is currently at 16 percent, in order to relieve Kenyans of the heavy load that is taxation.

 “Our tax rates in the 1970s used to be very high and we have tried to bring it down over the years. There is no reason why we should back on that reform agenda. If anything we would want to see the tax burden eased,” Mr Kinyua emphasised.

Head of Public Service Ambassador Francis Muthaura concurred adding that the government can afford to raise the financing needed from national borrowings and proceeds from development partners.

With the creation of county governments however, Mr Muthaura said they would be able to generate their additional funding through for instance collecting the proposed land rates as well as the entertainment sector.

Many experts including Commercial Bank of Africa’s Senior Manager of Treasury Raphael Owino have argued that the country will not struggle to finance these offices since the government might reallocate funds meant for other projects to support such bodies.

“What I think the constitution attempts to do is to disperse some of those resources both horizontally and vertically to the regions and so I do not necessarily think that it will be more expensive that what we have had,” Mr Owino argued.

He reckoned that the new document also seeks to seal the loopholes through which public funds is misappropriated, a move which might go a long way in ensuring that proposed projects are implemented successfully.

His views are supported by Vision 2030 Delivery Board Chairman James Mwangi who said that due to the ‘repositioning’ of responsibilities from one office to the new authorities will not necessarily translate into a bloated government.

In addition, Mr Mwangi said that timely execution of the measures outlined in the supreme law are likely to spur investments and many economic activities which will then translate into more revenues to enable the government run its affairs.

The peaceful manner in which Kenya conducted the referendum process on August 4 helped her to redeem her badly battered international image which has put the country in the good books of the donors. Many pundits are therefore of the opinion that many of these development partners will offer a helping hand to assist Kenya in its rebirth process.

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