President William Ruto of Kenya is facing a major setback in his plans to boost the country’s economy, as his tax proposals have been dealt a series of blows. The recent anti-tax protests, which turned violent with the burning of parliament, forced Ruto to withdraw his finance bill for the upcoming year. Additionally, the appeals court ruled that the tax legislation from the previous year was “fundamentally flawed” and “unconstitutional.”
These setbacks are putting pressure on the government’s ability to raise additional funds to support the national budget and service the country’s significant public debt of $78 billion. The chairman of the parliamentary budget committee, Ndindi Nyoro, warned that the rulings could result in significant shortfalls in the budget and limit the government’s ability to function effectively.
With the government’s tax plans for two consecutive years now derailed, analysts suggest that spending may need to align with the finance legislation from 2022. The government has appealed the court’s decision to the Supreme Court, but the situation remains uncertain for taxpayers.
Economists are divided on the best course of action for the government, with some suggesting the need for a new finance bill while others propose innovative tax solutions. The government has already made significant cuts to its budget, but further reductions may be necessary, including potential cuts to development projects and government salaries.
The country’s debt burden remains a significant challenge, and more taxes are seen as vital to address this issue. President Ruto recently signed a supplementary appropriations bill to align with reduced revenues, which includes cuts to government expenditure in various areas.
However, the government faces further legal challenges, with rights groups challenging its authority to spend without corresponding revenue generation. As the government navigates these legal battles and economic challenges, President Ruto is facing tough decisions ahead.
