Citizens Urged to Pay Taxes to Boost Domestic Revenue

Uasin Gishu, Wednesday, April 19, 2023

K.N.A By Ekuwam Sylvester

Kenyans have been called upon to abide by the law by paying taxes to help raise more domestic revenue in order to reduce the budget deficit, which is projected at 3 percent of the country’s Gross Domestic Product (GDP) by the fiscal year 2024/2025.

The Director of Planning at the Ministry of National Treasury and Economic Planning Ms. Monica Asuna has urged members of the public who have been evading paying tax to consider meeting their obligations, reiterating the need for the tax administration to strengthen policies to ensure taxes are raised efficiently in order to raise more domestic revenue, which will save the country from further borrowing.

The Director was speaking in Eldoret during a public participation forum to collect public views on The Public Finance Management (National Government) (Amendment) Regulations, 2023 and The Public Finance Management (County Governments) (Amendment) Regulations, 2023.

The amendment regulations for the national government requires the Cabinet Secretary, National Treasury to maintain at all times the public debt at a level not exceeding 55 percent of the Gross Domestic Product (GDP) in Present value (PV) terms.

On the other hand, the objective of the County Governments’ amendments in terms of county debt management is to ensure the county government’s financing needs and payment obligations are met at the lowest possible cost over the medium to long term, with a prudent degree of risk.

Asuna indicated that the country’s public debt is quite high with a nominal figure of Sh10 Trillion, which translates to 62 percent of the GDP, even as the government intends to reduce it to 55 percent.

She further noted that GDP growth last year was 6.2 percent, compared to this year’s, which is projected at 5.5 percent.

“As the office mandated to ensure our debt is sustainable, we are now at 62 percent, we need to find a way to come down to 55 percent so that it is manageable. If we can also raise more in terms of domestic revenue through our taxes, then we may not borrow more and our economy will grow because our public debt will come down to 55 percent or below,” said Asuna.

The Director further noted that having an economy improving in terms of GDP does not immediately translate to borrowing more, but only if public demands in terms of the services it wants the government to undertake increases and that if the budget deficit decreases, then the country will still have to borrow more.

She further pointed out that the National Treasury plans to reduce the budget deficit for the country to conform to the East Africa Protocol that all the East Africa countries should maintain a sustainable debt of not more than 3 percent of their GDP.

“We are trying to scale down the budget deficit and that will imply we will be borrowing less, but having more domestic revenue. In the financial year 2021/ 2022 we were at 8.7 percent, 2022/2023 (6.2 percent), while the 2023/2024 the projection is 4.2 percent. We project to go to 3 percent of GDP by 2024/2025,” Asuna noted.

Courtesy K.N.A