Treasury Cabinet Secretary John Mbadi has outlined a strategic plan to safeguard Kenyans from stringent tax measures often associated with the International Monetary Fund (IMF) loan agreements.
Speaking in an interview with Citizen TV’s Sam Gituku, Mbadi emphasised the importance of balancing the country’s fiscal needs with the public’s capacity to bear additional tax burdens.
His remarks come as Kenya navigates its ongoing relationship with the IMF, which is anchored on revenue mobilisation to service national debt.
Mbadi stressed that while revenue mobilisation is central to the IMF’s requirements, increasing tax rates is not the only solution.
He acknowledged that past attempts to raise taxes were unpopular among Kenyans, leading to public outcry and legal challenges.
“We are not going to oppress Kenyans with unnecessary taxes just because we have been told to do so,” Mbadi stated.
He noted that the government plans to focus on enhancing revenue collection efficiency rather than introducing new tax measures that could overburden citizens.
The Treasury CS also discussed the legal challenges surrounding the failed Finance Bill 2024, and Finance Act 2023 which has faced judicial opposition and was ruled unconstitutional by the Court of Appeal.
Despite these setbacks, Mbadi assured that Kenya’s financial stability is not compromised.
He noted that the Supreme Court had suspended the Court of Appeal’s ruling until the government’s appeal is heard and determined.
“Even if the 2023 Finance Act falls, we can still rely on the Finance Act of 2022 to continue collecting revenue,” he explained.
Mbadi said that the government is committed to reforming the Kenya Revenue Authority (KRA) to enhance its capacity to collect taxes more effectively, ensuring that all taxpayers comply without increasing the tax rates.
While highlighting the importance of maintaining a productive relationship with the IMF, Mbadi emphasised that any engagement must consider Kenya’s socio-economic realities.
“We must reason with IMF, much as we want to engage with them,” Mbadi said.
He highlighted the need for dialogue that acknowledges Kenya’s democratic framework, where public input and acceptance are vital.
Mbadi reassured Kenyans that the government would advocate for terms that align with the country’s long-term development goals.
In preparation for the upcoming IMF board meeting scheduled for September, Mbadi revealed that he had met with ambassadors from key global partners, including the United States, United Kingdom, Germany, and China.
These discussions aimed to strengthen diplomatic relations and ensure continued support from the international community.
Looking ahead, Mbadi reiterated the government’s vision of achieving a balanced budget within three years, reducing the need for external borrowing.
Mbadi added that the government’s objective is to cut down on daily borrowing and rely more on internally generated revenue.
This approach, he believes, will provide a stable economic foundation and reduce Kenya’s dependence on external financial aid.
Mbadi also mentioned a direct conversation he had with his appointing authority, President William Ruto.
Mbadi conveyed to President Ruto his intention to approach his role differently, from his predecessor, emphasising the need for reform and a departure from business as usual.
He stated, “I’ve told him very clearly, my president, you must understand that I’ve come here to do things differently, and he’s in agreement with me.”
This indicates that Mbadi has secured President Ruto’s support for his strategy, which includes avoiding oppressive tax measures and focusing on efficient revenue collection and economic reforms that align with Kenya’s socio-economic conditions.
