President William Ruto on Sunday put up a spirited defence of his administration eight months after assuming office, justifying heavy taxation and levies in the Finance Bill 2023 as Kenyans continue to grapple with high cost of living.
In a three-hour interview, the Head of State tackled wide ranging issues touching on politics, public debt, the controversial housing levy, independence of constitutional offices and divisive government appointments.
On the spiralling public debt, President Ruto said the country currently has a debt portfolio of Sh8.8 trilling, although figures from the National Treasury put it at Sh9.9 trillion, and his administration is working hard to control appetite for borrowing. He added that he will not encourage borrowing to fund recurrent expenditure, saying the country has to live within her means even if it means salary delays.
Further, he argued that he is looking at reducing the budget deficit from the current 5.7 per cent to 4.4 per cent by next financial year.
“I have heard people saying there is no country that can tax itself to prosperity. That is true, but you can also not accumulate debts into bankruptcy as an option,” said the President.
The Head of State defended the proposed new taxes contained in the Finance Bill 2023, saying Kenyans are not overtaxed. He argued that tax as a percentage of Gross Domestic Product (GDP) for Organisation for Economic Co-Operation and Development (OECD) countries is 34 per cent and for Kenya’s peers in the continent it ranges between 23 and 28 per cent, while Kenya is at 14 per cent.
“We are not overtaxing ourselves. In fact, I want to move the taxes to 16 per cent of the GDP because we have to be realistic. If we don’t pay taxes, then we cannot be in the same league as the countries we want to be like,” he said.
President Ruto made an about-turn on a pledge to scrap taxes on fuel, with plans to raise VAT on fuel from 8 per cent to 16 percent. He said that when he came into office, he found an artificial fuel crisis and moved with speed to reinstate the interbank forex market as well as negotiate for six-month credit on all petroleum products to ease pressure on the dollar demand.
To ease the pain, he said his administration plans to remove the 3.5 per cent road development levy from fuel, 8 per cent VAT on gas and 14 other taxes.
“When I came into office, I had to make difficult decisions. I stopped several subsidies that were being dished left, right and centre. We also had to make many changes and reorganise the whole budget because we found a country headed and sliding into bankruptcy,” he said.
The President said the mandatory 3 per cent housing levy is not a tax but a saving and will not only provide affordable housing units to Kenyans but also create employment opportunities of between one and two million annually. He added that the government is keen on reducing unemployment and uplifting the lives of over six million Kenyans living in 1,141 slums in the country.
Cheaper gas cylinders, the President said, will have to wait until the Finance Bill is passed by Parliament and not starting next month as he had promised. He further revealed that the government has launched a crackdown on illegal gas fillers who “are destroying the market and undermining our efforts”.
To grow Kenya’s manufacturing capacity, President Ruto said his administration has developed tea, textile, leather, edible oil and coffee value chains to bring manufacturing as a percentage of GDP to 15 per cent in the next five years.
On the war on corruption, he said he is still committed to building the capacity of investigative institutions to deal firmly and decisively with the vice, adding that corruption will not go away in a day.
The President said he is committed to root out graft in the country citing his decision to enhance the Judiciary’s budget and appointing more judges. Further, he observed that he gave financial independence to the Directorate of Criminal Investigations (DCI), Director of Public Prosecutions (DPP), Ethics and Anti-Corruption Commission (EACC) and the National Police Service to remove unnecessary pressure from the Presidency.
“I have been very clear to the DPP, EACC and DCI bosses that no one should call me and I will also not call them. I don’t want to be informed. Let them prosecute everybody they want to prosecute,” he said.
The President said he will not entertain trumped up charges even as he denied having a hand in the dropping of high-profile corruption cases by the DPP.
The President added that he is ready for his government to be held to account and that is why he is pushing for the creation of the office of the leader of opposition.
On the political front, the President defended plans to amend the law on public demonstrations, saying Article 34 of the constitution allowing for picketing has been abused.
“I don’t think you can take away the right of any citizen to picket but we can agree on the way it can be done,” said the President.
He defended recent “skewed” State appointments that have caused uproar, saying there are people who supported his presidential bid and have legitimate expectations for their support and it happens world over.
“We are so obsessed with 10 or 20 people. It doesn’t matter if I appoint 20 people from a certain community. It does not change a thing,” he said.
Even as he apologised for the Shakahola deaths, President Ruto defended the formation of a Commission of Inquiry and a task force on religion, saying the move is aimed at ensuring religion is never used by criminals and crooks to cause harm.
“Certainly, some people who are responsible for this failure (Shakahola deaths) on the part of the government, will have to give an account because it should not have happened when we have all our intelligence and investigative agencies,” he said.
