Former Treasury Cabinet Secretary Prof Njuguna Ndung’u has disclosed the challenges the Treasury docket has faced since the Kenya Kwanza administration took over, revealing indeed there was pressure on the ministry to impose high taxation.
He revealed that from the onset, the government’s measures to impose high taxation on Kenyans to boost revenue were not feasible, stating that it have never been the solution to the country’s ailing economy.
During his exit meeting at the Treasury Building on Tuesday, August 13, he highlighted significant missteps by the government in its quest for economic stability and expressed sympathy for Kenyans who have had to endure the burden of high taxes to support the government.
“We need to move from this notion that high taxes will raise high tax revenue, the reality is the opposite. And because they high taxes cannot raise high tax revenue, we need to study and optimize each tax instrument,” he stated while declining to reveal the forces behind high taxation.
Njuguna also confirmed that the Treasury docket was marred with issues pertaining to the formulation of internal policies, posing a setback to strides achieved in reducing poverty and inequality in the country.
“It (high taxation) reversed poverty reduction efforts by 20 years, it also reversed efforts of fighting inequality by over 20 years, for example the drought itself had more devastating consequences in terms of inequality and because of that the government became the only driver of the economy,” he noted.
He recommended a comprehensive tax policy reform and a three-year study aiming to boost the country’s GDP.
“We want to come up with a tax policy that is predictable in terms of revenue in the manufuctaring sector and the production sector, so that they know tha ttaxes will not change periodically and that they will not distort the market,” the former CS suggested.
Incoming CS John Mbadi has pledged to boost state revenues and support the Kenya Revenue Authority’s (KRA) strategies, with a goal of increasing revenues by approximately Ksh400 billion.
“If we can increase our revenue collection to GDP by just 3 percent, I’m confident that we would generate nearly Ksh400 billion in additional funds. This would resolve many of our issues, close the budget deficit, and propel the country forward,” he explained.
