‘We demand tax cuts’ – Azimio

Azimio la Umoja-One Kenya coalition party has demanded tax cuts from the government, citing the rising cost of living.

In a statement on Friday, November 10, 2023, Azimio leader Raila Odinga accused the Kenya Kwanza administration of mismanaging public funds through corruption and inflated budgets.

“For us in Azimio, reduction in the cost of living is a priority economic imperative. This will be achieved by providing some basic relief to citizens, including reduction of taxes; and stimulating production. To release resources to achieve these objectives the government must cut the budget by an estimated 500 billion shillings. The current policies have hit low-income families particularly hard. These are the same low-income families that the administration promised to lift up,” Raila stated.

“In particular, we must cut fuel taxes and raise social welfare payments. At this time of duress, we demand tax cuts, not increases. Kenyans needed to see their taxes go down, not up. We believe the current taxation regime is not sustainable.”

The opposition leader spoke a day after the National Dialogue Committee concluded its bi-partisan talks, which, among other things, was expected to tackle the cost of living.

On Kenya Revenue Authority (KRA) missing its targets, Raila said this was due to suppressed spending by Kenyans and businesses as a result of the skyrocketing prices of goods.

“We warned at the beginning that beyond a certain point, increasing taxes leads to lower collection. It has become real as KRA misses one revenue target after another. Tax on fuel is up, but fuel levy collection is down. Stimulate production: Interest rates need to come down in order to stimulate economic activity,” Raila added.

“We do not have to increase our budget in order to look important. State departments with overlapping functions need to be scrapped. Why do we have coordination of international development partnerships at both the Deputy president’s office and the ministry of foreign affairs, complete with budget lines while the National Treasury also runs an external resources department? At the same time, we need to stop duplication of devolved functions at the national level.”

Tax effects

Raila says that the private sector is facing a bleak future, with several executives of big companies revealing that they expect to cut their workforce.

Raila quoted a report by the Central Bank of Kenya (CBK) which shows that 26.3 per cent of CEOs in the country expect to cut their workforce between now and the end of the year while 63.5 per cent will not be hiring.

“At the Nairobi Securities Exchange, some 6, 256 foreign investors fled in the last nine months. This is 42 per cent of foreign investors. This exodus is a result of the rabid but unstable tax policies that are scaring away foreign investors and leading to low revenue collections. In October the same NSE was ranked the worst-performing African bourse in the first nine months of the year in dollar returns. Investors prefer a country with a stable taxation policy, a stable currency, and a growing economy,” Raila added.

Raila accused the Kenya Kwanza regime of changing tax policy frequently, mismanaging the shilling, and weakening economic growth.

The Kenya Revenue Authority (KRA) missed its revenue target for the first quarter of the current financial year by Ksh79 billion.