Ruto Pinpoints Uhuru Mistake That Messed Economy
President William Ruto has consistently asserted that the current economic difficulties can be attributed to the tax policies implemented by his predecessor, Uhuru Kenyatta.
In a Sunday morning tweet, the Head of State, Ruto, maintained that Uhuru had depleted public funds by decreasing the ratio of taxes to Gross Domestic Product (GDP) from 20.1 percent to a mere 14 percent.
On the flip side, the President presented a visual representation suggesting that ex-President Mwai Kibaki consistently kept the ratio above 20 percent, fluctuating between 22 percent and 23 percent.
“This is where the problem lies,” he fired off.
When Kibaki took over the reins for his second term in 2007, he raised the ratio from 22 percent to 23.1 percent.
The information revealed that Uhuru obtained a percentage of 20.1 in 2013, but steadily declined over the course of 10 years. The most significant drop occurred between 2018 and 2020, decreasing from 17.6 percent to 14 percent.
Information from the Central Bank reveals that during the 2019/2020 Financial Year, Kenya’s actual Gross Domestic Product (GDP) amounted to Ksh8.7 trillion, a significant increase from Ksh6.6 trillion in 2013. In 2007, the real GDP was recorded at Ksh1.3 trillion.
Nevertheless, experts believe that the changes in taxation could be attributed to the two instances of the tax year being recalibrated under the leadership of Uhuru. The first occurred in 2014, coinciding with a GDP increase of more than 25 percent, followed by another adjustment in 2019, associated with a GDP rise of over 5 percent.
Meanwhile, the taxation rates remained largely the same.
During a conversation with PoliticalPulseChat, Professor Fred Ogolla contended that evaluating the health of an economy through the taxation ratio on GDP is a flawed approach.
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He contended that although an increasing GDP indicates economic growth, it doesn’t necessarily result in citizens having access to services. Some of these services may be funded by government commercial activities that aren’t taxed.
“Tax ratio to GDP is a figure he has taken out of convenience. We should be talking more about how the increase in GDP and taxation increases the number of people who are employed, and access to education and health. According to me, tax to GDP is not a figure to measure,” he stated.
“Taxation to GDP should measure how much the GDP relies on taxation. How much money you are taking from people? You know, some government services are not taxed but provide revenue to the government.”
When Ruto ascended to power, he revealed that he inherited empty coffers and needed to make radical changes to turn around the economy.
“You know what reggae and Building Bridges Team did to our economy? When I took over, there was nothing in the granary, even rats had fled,” he told a congregation in Sugoi in December 2023.
“I have since managed to convince our development partners to help us resuscitate it despite criticism from my opponents.”
The Head of State, as a result, introduced a raft of new taxes including contributions to the housing levy as well as the Social Health Insurance Fund.
Despite legal hiccups, a plethora of new taxes and contributions are also on the way including an upward revision of the National Hospital Insurance Fund (NSSF) deductions expected to take effect in February.
Meanwhile, Ruto insists that it will take at least two years to turn around the battered economy.
Ruto Pinpoints Uhuru Mistake That Messed Economy
