Saturday, May 18, 2024

IMF Asks The Kenyan Govt to Go Slow on Taxes

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The International Monetary Fund (IMF) wants the Kenyan government to consider the sustainability of new policies. IMF has been influencing Kenyan economic decisions it suggested that the introduction of new taxes should be subject to public opinion. President William Ruto plans to raise more revenue through other proposed levies after signing the Finance Bill 2023 into law.This is according to the Draft Medium-term Debt Strategy for 2024/25 to 2026/27 financial years.

IMF MD Kristalina Georgieva(left) with Kenyan President William Ruto

IMF has rather advised the Kenyan Govt and other Sub Saharan countries to introduce taxes gradually.Amid backlash over the implementation of the Finance Act 2023 and the proposal of new levies, the Bretton Woods institution wants the government to consider the sustainability of these new policies. The multilateral lender which has been influencing Kenyan economic decisions, suggested that the introduction of new taxes should be subject to public opinion. “Sustainability of new policies depends on the government’s ability to win over public opinion either by showing that reforms generate rapid benefits or by making a case for their desirability on longer-term grounds,” the IMF stated on Tuesday, September 26, as reported by The East African.

Increased taxes could lead to companies exiting the market and downsizing their operations. This could mean that unemployment rate is likely to go higher and relatively poverty levels and poor living standards.Treasury proposes Motor Vehicle Circulation tax to be paid annually by all motor vehicle owners at the point of acquiring insurance cover. Another suggestion is the introduction of a final withholding tax on agricultural produce not exceeding 5% of the value of the produce delivered through cooperatives or other organised groups. Others are the introduction of VAT on services in educational institutions that are not directly linked to education and the re-introduction of the minimum tax.

Maryvine Moraa
Maryvine Moraa
MBA, Business Administration & Accounting. A Passionate IT Enthusiast.

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