Kenya Kwanza had to make tough decisions on taxes, says Mudavadi

By Kivisu Mbungu-People Daily

Prime Cabinet Secretary Musalia Mudavadi has defended the Finance Bill 2023, saying it is part of the government’s strategy to fix the economy.

Mudavadi said the government has had to make tough decisions and that it will take time to turn around the economy.

“The government has taken a bold step towards broadening the tax base so that we increase what we collect locally as revenue. This is the only way we will be able to boost agricultural sector operations, enhance food production and create jobs for us to stir economic growth,” he said.

False promises

He made the remarks in Mombasa when he addressed the 40th Annual Seminar for the Institute of Certified Public Accountants of Kenya (ICPAK).

“As a government, we do not want to lie and give false hopes and promises. I am being pragmatic, realistic, and forthright in my assessment, that resuscitation of the economy will take at least two years,” said Mudavadi.

The Prime CS said the question of Value Added Tax (VAT) had been mis-conceptualised in the past and the Finance Bill 2023 should cure the problem once and for all.

“The government has shifted its subsidy policy from consumption to production. The few beneficiaries on the consumption side are crying out loud. For the government, the principle of majority beneficiary applies, and through the Finance Bill, the government proposes to provide exemptions under the VAT Act for fertilizers and inputs or raw materials locally purchased or imported by manufacturers of fertilizers. This will lower the cost of fertilizer, which will in turn lower the cost of production,” he explained.

He said the government was deploying all the measures within its power to address the challenges facing Kenyans and foster a resilient and inclusive economic recovery process.

“The commitment to prioritize the lives and livelihoods of Kenyans above all else is our key priority,” he affirmed.

Mudavadi said the situation the country is in had made it necessary for the government to amend various laws relating to taxes and duties.

“We are in a difficult position as a country. The government intends to raise about Sh60 to Sh70 billion from the 16 percent VAT imposed on fuel and petroleum products. Where else, at this point, do we get the revenue now that the legroom for our external borrowing is largely constrained?” posed Mudavadi.

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