Nairobi — The National Treasury Principal Secretary Chris Kiptoo has pledged to robustly engage in formulating framework to widen the taxbase and increase tax compliance as fiscal consolidation measures.
With the current national debt mark standing at Sh8.8 billion and huge recurrent expenditure by the government, Kiptoo pointed out that there is need to increase the tax base by focusing on the informal sector form the majority of working force in the country.
“We have little fiscal space given the huge development agenda and we can only deal with this by widening the tax base and increasing compliance with those currently existing,” he stated.
“I will be joining a team that will be working on strategy to increase the tax base and we will be looking at income tax for those in formal employment and also VAT which is a consumption tax because there is a lot being left out,” Kiptoo told MPs.
The Principal Secretary nominee mentioned that he will focus on fast tracking the tax base to 20 million individuals from the current 6.1 million Kenyans which is below par.
Kiptoo asserted that the move by President William Ruto to support the informal sector will ensure that more than 16 million Kenyans without tangible income are netted in the tax base.
“The best way is to have a structured way of addressing the sectors and have a discussion with them and see what is the optimal rate. We have to work with KRA to ensure that business are supported because when we close businesses they are a lot of implications negatively,” Kiptoo stated.
This comes week after President William Ruto urged Kenyans to pay taxes to enable the government fulfil its mandate for Kenya to be an independent nation.
The Head of State stated that will be the viable solution to steer development in the country without huge reliance on foreign debts.
“The only way we can truly be an independent nation is when we can support our development with our own resources,” Ruto said.
President Ruto mentioned that his regime is working to solve the huge debt crisis due to the ballooning debt in the country that now stands at Sh8.2 trillion.
He revealed that the government is focused on financing development project using taxes pointing out that the government is currently paying more than Sh1 trillion to service the huge loans currently.
“We must stop the tendency of borrowing from other countries and we start looking for own revenue. It’s possible by increasing our tax collections from the current Sh2 trillion,” he stated.
The Head of State expressed that the nation will not been enslaved in debts by foreign nation if the tax collection based is increased to occasion additional revenue.
“The bible says the borrower is a slave to the lender. We don’t want our nation to be in debt,” President Ruto said.
In the current statistics, China accounts for one-third of Kenya’s external debt.
Kenya’s debt registry as of the end of last year shows gross public debt crossed the Sh8 trillion mark to stand at Sh8.2 trillion against the country’s nominal GDP estimated at Sh10.7 trillion.
This means for every Sh10 earned from the sale of goods and services in the country, Sh7 covers loans, illustrating Kenya’s high level of indebtedness.
The external debt burden has worsened due to the persistent fall in the value of the Kenya shilling and the economic slump that followed the Covid-19 restrictions.