The Kenyan government has been setting pace in the introduction of new taxations. The 2024 finance bill is set to see the introduction of new taxes such as the motor vehicle tax. The taxation will be paid on 2.5% of the value of the vehicle with the minimum taxation standing at Ksh 5000 and the Maximum amount at Ksh 100,000.
Government officials have come out stating the tax is targeting motor vehicle owners who evade taxation. Officials are yet to put out a clear response on how they will protect tax-compliant citizens from the tax.
The Kenyan debt currently stands at Ksh10.398 trillion. The Kenya Kwanza government has termed their increase in taxation as a front to try and pay up our debts. While living within our means. Shillings 5.253 trillion is domestic debt that we acquired locally.
The remaining 5.163 Trillion of Kenya’s debt is externally acquired. The 3 financers of Kenya per external debts are; World Bank /IMF- Kenya owing them Shillings 2.21 trillion, The Eurobond with Kenya having a debt of Shillings 1.11 trillion and China with Kenya owning a debt of Shillings 939 billion.
Eurobond and China were our primary go-to lenders with the World Bank/IMF being used in rebasing our economy when others can’t come through. The money acquired from the World Bank/IMF is essentially used to pay off the Eurobond and China’s debt.
With the IMF and World Bank, the terms and conditions are more vicious compared to other lenders. The period of payment is 35 years with a grace period of 10 years. One of the conditions with the World Bank/IMF funds is the rationalizing of state-owned enterprises. This equates to privatizing government-owned corporations by putting them up on the stock market an example is the KICC.
By privatizing some of the corporations the remaining ones that make money on their own, areas such as the National Cereal Board are extended funding by the government.
Another condition is the Removal of subsidies here is where taxations come in. This is such that the flue increased from 8% to 16% last year, saw it hit above Ksh 200 for the first time. This was one of the requirements for the funds Kenya received.
The government is currently putting efforts into increasing on taxations. The 2023-2024 financial year target for revenue collection was Shillings 2.49 trillion with the government setting an increase in the target, for the 2024-2025 financial year to be at Shillings 2.9 trillion.
Kenyans are awaiting the visualization of these tax reforms that they have termed as too heavy for them to bear.
