Written By Lisa Murimi
Budget analysts advising Kenya’s Parliament have urged President William Ruto to avoid implementing new tax policies, stating that frequent adjustments have not yielded increased revenue.Â
The Parliamentary Budget Office (PBO), led by Dr. Martin Masinde, warned that recent tax changes have neither improved compliance nor enhanced collections, with the government missing its tax targets by Sh123.6 billion in 2023 and Sh205 billion in 2024.
The experts attributed these shortfalls to costly tax expenditures and ineffective amnesties, which have strained government revenue.
They emphasized that Kenya’s approach to tax policy must prioritize efficient administration and enforcement over new tax measures, especially after this year’s public protests led President Ruto to withdraw the Finance Bill, 2024, which proposed Sh 344.3 billion in new taxes, including a vehicle tax and an eco-levy.
Treasury officials have acknowledged the difficulty of taxing a limited portion of the population.
While Treasury Cabinet Secretary John Mbadi highlighted efforts to improve VAT collection, the PBO recommended technological upgrades, integrated systems, and stricter enforcement to stabilize Kenya’s tax base.
The report also warned against frequent tax amnesties, noting that such policies could encourage evasion.
Experts suggest Parliament carefully monitor amendments to VAT laws, as VAT remains a key revenue source.
