Kenyans are facing heavy tax burdens due to new levies for housing and health services, leading to a significant reduction in take-home pay. President Ruto’s administration is attempting to raise revenue amid a staggering foreign debt. As public skepticism grows over accountability, fears of further unrest are rising with upcoming budget proposals possibly including more tax increases.
In Kenya, many citizens are feeling the pinch from recent tax increases, as effective deductions from their pay stubs reveal heavy levies aimed at funding affordable housing and health insurance initiatives. A notable example is seen with salaries around 45,000 shillings (roughly RM1,474), which have seen a 9% drop in take-home pay due to these changes. “People who are salaried are crying,” noted Kennedy Odede, a community leader in Kibera slum, pinpointing widespread anguish.
Under President William Ruto’s leadership, increased payroll taxes are just one step in a broader effort to improve revenue for government operations amid a staggering foreign debt. New excise taxes on essentials such as sugar, alcohol, and plastics have been introduced, alongside a business profit tax that was doubled to 3%. Additional taxes affecting money transfers, phone services, and even imports of everyday items like wheat and cooking oil have also been raised, leading to mounting costs for consumers.
Kenyans have faced economic turmoil in recent years, with the situation exacerbated by the fallout of the Covid-19 pandemic, rising interest rates, and inflation that pushed debt levels to around US$80 billion. The government has to devote nearly 60% of its revenue to servicing loans, which is a significant drain on resources. As noted, it’s a situation not unique to Kenya—across Africa, many countries spend more on debt interest than on health or education.
Despite the pressing need for funds, Kenya’s economy boasts a large proportion of people—about 40% of its population of 52 million—living in poverty. A staggering 25% youth unemployment rate further complicates the economic landscape, where many laborers operate informally, under the radar of tax authorities. As a result, a small segment of the workforce bears the tax burden heavily.
Elizabeth Okumu, a worker at the non-profit Shofco, expressed the decline in purchasing power due to tax hikes, saying essential items are becoming increasingly unaffordable. She noted how, just six months ago, 1,000 shillings (about RM32.7) could buy several staple foods, and now it falls short.
The reforms are controversial, and historical context remains crucial—last year, proposals for tax hikes led to deadly riots in Nairobi, leaving over 50 people dead and parts of parliament damaged. Although the government backed down temporarily, many of those taxes returned soon after.
Now, the administration is in talks with the International Monetary Fund regarding a new loan package, which will likely demand drastic fiscal adjustments. However, raising revenue in Kenya is a delicate act, as public sentiment grows skeptical about the government’s accountability and any potential investment in social services.
Auditor-General Nancy Gathungu has reported alarming instances of mismanagement, leaving over a billion dollars unaccounted for in government allocations, which raises serious concerns. “Ruto says we need to pay our debts, but there are no public services to show for it,” voiced Tatiana Gicheru, a Strathmore University student. She reflects a broader frustration about the evident lack of essential services such as healthcare and public transport.
With tension building ahead of upcoming budget proposals which may feature further tax increases, the prospect of unrest looms again, as many remember the chaos from the last riots. With people hoping for light amid persistent struggles, Okumu lamented, “But when tomorrow comes, it’s still darkness.”
As Kenya grapples with mounting debt and recent tax hikes, a significant portion of the population faces increasing financial strain. Concerns over the government’s capability to deliver essential services and manage funds effectively are fostering skepticism and tension among citizens. Continuous economic challenges, including high unemployment and poverty rates, underline the urgency for reform, yet the specter of unrest remains as many wonder if relief is on the horizon amidst rising taxes.
Original Source: www.thestar.com.my
