High Taxes and Their Impact on Kenyan Citizens
High Taxes and Their Impact on Kenyan Citizens. Ekuru Aukot, the leader of the Thirdway Alliance party, has recently raised concerns about the adverse effects of high taxes imposed by the Kenya Kwanza administration on the country’s economy and its citizens. Aukot argues that these excessive taxes are not only driving businesses to closure but also making Kenyans poorer and instigating frustration among them. In this article, we will delve into the implications of these high taxes on the cost of living, business sustainability, and the general well-being of Kenyan citizens.
The Expense of Living
One of the immediate and tangible impacts of high taxes is the increased cost of living for Kenyan citizens. The Kenya Kwanza administration, under President William Ruto, has implemented policies that have raised tariffs on various goods and services, contributing to the financial strain on the average Kenyan household.
Kenyans have felt the burden of these policies by introducing turnover taxes for businesses with gross sales ranging from Sh1 to Sh25 million. This places an additional financial burden on entrepreneurs. This impedes the expansion of small and medium-sized enterprises crucial for the country’s economic development.
Furthermore, the 5% withholding tax on local digital content creators and the 1.5% housing charge on gross income have added to the financial stress of individuals and small businesses. These taxes affect the livelihoods of content creators and make homeownership less accessible for many Kenyan families.
In addition to these taxes, the 16 percent value-added tax on petroleum products and excise duties on gambling and betting contribute to the rising cost of living. As a result, ordinary Kenyan citizens find it increasingly challenging to make ends meet and provide for their families.
Impact on Businesses
Aukot’s concerns are not limited to the burden on individuals. He emphasizes that high taxes are taking a severe toll on businesses in Kenya. The government’s strategy to increase tax revenue has led to a business environment where many enterprises are struggling to survive, and some are being forced to close their doors permanently.
The turnover tax, in particular, disproportionately affects SMEs. These businesses are already grappling with various operational challenges, and the additional tax burden further reduces their competitiveness. As a result, many SMEs need help to reinvest in their companies, hire more employees, or expand their operations.
The 5% withholding tax on local digital content creators also hampers the growth of the creative industry in Kenya. Talented content creators who could contribute to the country’s cultural and economic development face financial setbacks, which may deter them from pursuing their passions and talents.
Aukot’s assertion that companies are being driven out of business due to excessive taxes is a stark reminder of the adverse consequences of these policies. When businesses struggle or close down, jobs are lost, and economic growth is hindered.
Anger and Frustration
Beyond the economic consequences, Aukot highlights the growing anger and frustration among Kenyan citizens in response to the high taxes. As the cost of living continues to rise and businesses face challenges, the everyday person is left to bear the brunt of these policies.
People are understandably frustrated when they see their hard-earned money eroded by taxes, leaving them with less disposable income to meet their basic needs, save, or invest. The feeling of not having enough to make ends meet can lead to dissatisfaction and, in some cases, unrest.
Furthermore, as businesses face closure or downsizing due to the financial strain of high taxes, employees are left jobless. This further exacerbates the frustration and uncertainty among the Kenyan workforce. High Pay-As-You-Earn tax rates on higher incomes can also discourage skilled professionals from staying in the country, as they seek more favorable tax environments abroad.
The implications for the government are significant, as the growing frustration and anger among citizens can lead to social unrest, which may be detrimental to the country’s stability and overall development.
Ekuru Aukot’s concerns about the impact of high taxes in Kenya are not to be taken lightly. The policies implemented by the Kenya Kwanza administration have undoubtedly led to a higher cost of living, financial challenges for businesses, and growing frustration among the citizenry.
To address these issues, the government must reconsider its taxation policies and balance revenue generation and the welfare of its citizens and businesses. Debt restructuring, tax cuts, targeted subsidies, and reducing wasteful government spending are some measures that can help alleviate the burden of high taxes on Kenyan society.
Ultimately, a comprehensive approach is needed to strike a balance between fiscal responsibility and the well-being of Kenyan citizens. It is the government’s responsibility to ensure that its tax policies do not drive businesses into closure, make Kenyans poorer, or incite anger and frustration. The path forward should aim for a more equitable and sustainable economic environment that benefits all.