News and Analysis
November 15, 2024
Tuesday, 𝐍𝐨𝐯𝐞𝐦𝐛𝐞𝐫 19, 𝟐𝟎𝟐𝟒
The National Treasury aims to raise an additional Ksh343 billion in tax revenue for the 2024/25 financial year, targeting a total of Ksh2.732 trillion amid mounting debt pressures and a Ksh4.329 trillion budget. Proposed measures include increased Income Tax, VAT, excise duty, and import duty, alongside expanded efforts to tax the informal sector and curb evasion through digital surveillance as reported by Business Daily. The move comes as the government navigates competing demands from citizens grappling with high living costs and international lenders like the IMF urging fiscal reforms. However, the push risks reigniting social unrest seen during June's anti-tax protests. The National Assembly is currently undertaking a public participation exercise on the proposed tax increase. The public participation hearings will take place in Isiolo, Siaya, Bungoma, Taita Taveta, Mombasa, and Kericho.
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Kenya's Communication Authority (CA) is seeking the UN's assistance to regulate satellite providers like Elon Musk's Starlink, citing challenges in managing cross-border operations and emerging technologies. The move aims to ensure fair competition within the country's telecommunications sector while addressing the regulatory gaps posed by satellite internet services, as reported by Business Daily.
County governments are at risk of halting operations by January 2025 due to delayed fund disbursements from the National Treasury. The Council of Governors (CoG) has raised concerns over Ksh63.6 billion in arrears for October and November, compounded by delays in passing the County Allocation of Revenue Act (CARA). While Treasury CS John Mbadi claims October funds have been disbursed, counties remain strained, operating on half their equitable share. The CoG warns of severe impacts on service delivery and has called for urgent action from the Senate, Treasury, and Controller of Budget to avert a crisis.
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A report by PwC has highlighted major deficiencies in tax transparency among Kenya-based multinationals and top-listed companies as reported by The Standard. None of the surveyed firms disclosed tax strategies, transfer pricing approaches, or links between tax practices and ESG goals, scoring an alarming 4.8% on transparency metrics compared to Spain's 66.6% or the UK's 44.3%. This comes amid growing calls for accountability and the government's intensified efforts to broaden the tax base. President William Ruto has targeted rogue practices at the Kenya Revenue Authority (KRA), particularly within its Large Taxpayers Office, to curb revenue leaks and meet collection targets.
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Further, The Standard reports the drop in Kenya's inflation rate to 2.7% has raised debate over whether this reflects effective market correction or signals a shrinking economy. While Treasury officials highlight stable currency exchange rates and robust growth indicators, concerns persist over high taxes, reduced credit access, and rising business closures, such as Tile & Carpet Centre and G4S layoffs. Critics argue that increased taxes and reduced disposable income are stifling demand, forcing businesses to scale down. Though the government insists bottom-up economics are working, experts caution that current trends may reflect economic strain rather than sustainable growth.
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