Kenya’s finance ministry is working to reinstate several tax measures lawmakers were compelled to drop following weeks of deadly protests championed by the country’s young population.
These taxes, originally part of the Finance Bill 2024 and intended to generate around 344 billion shillings ($2.7 billion) in the current fiscal year, were scrapped after demonstrations resulted in over 61 deaths and led President William Ruto to dismiss his entire cabinet, Bloomberg reported.
“Our team is already working on some of those proposals that were in the Finance Bill 2024, which we can now put together and take back to parliament, not as a Finance Bill, but as other proposals,” new treasury head, John Mbadi, said.
“We will do extensive public participation because we don’t want to be blamed again, to be accused of introducing things that are insensitive without considering the plight and concerns of Kenyans.”
Some of the proposed taxes included raising levies on essentials such as bread and diapers. This bill was the second one introduced since Ruto came to power in 2022.
The first bill sparked controversy by introducing a housing tax, doubling the value-added tax on fuel, and increasing the top income tax rate to 35%. However, an appellate court last month struck down those taxes, declaring them unconstitutional.
While the new tax bill would inevitably create significant stress on the average Kenyan and raise the cost of living even further, the money from the tax increase was intended to service the country’s debt.
President Ruto has always maintained that increased taxes are crucial for funding development programs and managing a significant public debt that exceeds the levels recommended by the International Monetary Fund (IMF) and the World Bank.
According to him, the proposed tax bills would have cut the debt burden by over $80bn (£63bn). Currently, an estimated 60% of Kenya’s collected revenues go to servicing debt.
The president also stated that Kenya will need to borrow one trillion shillings ($7.6 billion; £6.1 billion) only “to be able to run our government.” This is a 67% increase above what had been intended.
He however disclosed that he was exploring spending cuts throughout government, including in his own office, as well as decreasing payments to the court and county governments.
