Why Raila wants State to rethink taxation system
Opposition leaders have told the government to widen the tax base and stop imposing high taxes on Kenyans. Led by former Prime Minister Raila Odinga, they said it is only by widening the income tax base that the government will be able to collect taxes from more people.
The Azimio La Umoja leader said rather than double or triple chargeable services offered by the government, the State should rethink its strategy.
“We want the government to spread the net or widen the tax base which by time will result in increased income tax rates,’’ he explained. Currently, the government needs to increase revenues so as to cover increased expenditures such as the recommended increments in salaries to public servants.
The national budget, Raila stated, needs to catalyze rather than curtail economic activities and continue to improve the investment climate. But the million-dollar question bothering the country’s leadership now is how to balance these competing interests with many Kenyans opposed to high tax ratios.
Fiscal structure
Speaking in Sena village, Mfangano Island, Raila called for a rebalance of the fiscal structure for particular sectors to be more growth-oriented. “Even if the government increases taxes by 100 per cent every day, that won’t help to grow the economy overnight. No,’’ he said. Raila advised the government to explore the scope for introducing new environmental taxes, perhaps developing a model where every citizen will pay tax depending upon his or her income per capita. He regretted that the new mode of collecting taxes would hurt businesses, especially the small and medium-sized enterprises, (SMEs).
“Today, the SME sector plays a crucial role in the economy but our fiscal regime does pose a number of challenges that affect their growth and viability,’’ he said.
The comments come in the wake of the current spirited efforts by the government to increase taxes for its services to generate more revenue.
The opposition leader claimed that corruption was rife in Kenya Revenue Authority’s customs department and in the government procurement systems.
“These are the areas that when I was the Prime Minister, we tackled and helped to seal the revenue seepage and improved our fiscal stability,’’ Raila claimed.
He recalled how they were able to increase revenues from the Sh200 billion that the then former President Moi regime was collecting bit by bit to Sh300 billion annually, then Sh500 then Sh750 billion to Sh1 trillion. “In order to catalyse the growth of all sectors, we would propose a reduction in the excise duty rate and income taxes to increase consumer purchasing power,’’ he said.
Currently, the purchasing power of most households or salaried people is reduced due to the high levels of taxation, with a number of people reduced to survive on little income or cut salaries.
In the past, it has been observed that countries with a decent tax base are more likely to grow than those with a poor tax base and this echoes why the opposition wants a modest tax regime.
Raila was flanked by Public Accounts Committee Chairman John Mbadi, MPs Lilian Gogo (Rangwe), Millie Odhiambo (Suba North), Homa Bay Governor Gladys Wanga, Deputy Governor Oyugi Magwanga and Homa Bay Senator Moses Kajwang. The lawmakers claimed that the tax imposed by the government was burdening the already highly taxed Kenyans through the products they buy daily.
Cost of fuel
With the cost of fuel and energy also constantly going up, the MPs claimed many Kenyans would not be able to meet the set taxes and this could spark resentment. “This time round, if the State is not careful, then we are seeing a situation, where the people may revolt even without the leaders asking them to do so,” said Gogo.

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