Kenya: Ruto burdens Kenyans with increased taxes to deliver on promises

As of 1 January, the Ruto administration announced a 20% tax on Kenyans transferring money from their personal bank accounts into their mobile money transfers commonly known as M-Pesa.

Francis Atwoli, Secretary General of the union workers, says the decision by the Ruto administration to increase tax on mobile money transfer is ill-advised and will see many Kenyans shy away from the service out of fear of acquiring losses.

Atwoli adds that if the taxes are not removed, it may endanger the innovation of M-Pesa, a service that has helped ease the movement of money, especially from the urban to rural areas for over a decade now.

“President William Ruto should not hurt Kenyans in his mission to collect enough taxes to implement his manifesto,” he said in a statement opposing the move.

The move by GoK to have access to and or investigate MPESA transactions is ill-advised and counterproductive. Instead, GoK should ensure that outsourcing companies regularize the employment terms and conditions and that they pay all the statutory deductions including PAYE & NSSF. pic.twitter.com/h7bJuHxzbi

— Francis Atwoli NOM (DZA), CBS, EBS, MBS. (@AtwoliDza) January 20, 2023

Technology firms are also now charging a digital service tax of 16% for any transaction conducted on the internet. That includes streaming and listening to music online.

Jayson Sagini, a content creator on YouTube who hosts a sports show twice a week, says the increase in taxes has affected him. He can only manage to live stream his programme once a week and sometimes he fails to do that on account of the increased costs of purchasing enough bundles.

“I’m very disappointed with this government, it lied to us. I no longer enjoy content creation. I’m losing fans,” he tells The Africa Report.

Sammy Awusa, an upcoming poultry businessman in Vihiga, Western Kenya, tells The Africa Report that he no longer takes his profit to the bank, for fear of high charges incurred from transactions.

“My business is still growing, for now, I’m avoiding bank transactions. I will keep my money at home,”  he says.

Starting in April, Kenyans will also have to pay more for electricity after the Energy and Petroleum Regulatory Authority (EPRA) announced that it intends to withdraw the monthly subsidy that cushions poor households and increase the prices by 78%.

The move is expected to affect small business dwellers that depend on cheaper electricity to earn their living.

Pay taxes if you want government delivery

President William Ruto says his government will not back down on its quest to collect more taxes, telling Kenyans to honour their tax obligations if they expect his government to deliver on its promises.

Ruto, who is seeking to expand annual revenue collections to KSh5trn ($40.2bn) by 2027 to cut debt from the previous administration, says the increase in taxes and his government’s decision to reject tax waivers are geared to help meet pressing development needs.

“With all these development initiatives it will be difficult to finance our programmes if we all don’t pay our taxes,” he says.

However, his political opponent Raila Odinga wants Kenyans to reject tax reforms being introduced by the Ruto administration, saying Kenyans are already overtaxed and cannot bear more heavy taxes.

Raila has criticised Ruto for making life more difficult for the majority of poor Kenyans, demanding that any change in taxation involve the public.

“There has to be public participation, before the increase in any taxation,” Raila says.