Meeting Kenya’s ever-growing development needs, largely financed through taxation, is an arduous task. The broader fiscal context Kenya finds itself in currently makes even the challenge daunting. In the 2023/2024 Budget Policy Statement, the National Treasury notes that while the country’s economic status has remained resilient, despite the uncertainties caused by multiple global shocks, there is a need to recalibrate the country’s fiscal approach. Consequently, the Treasury has propped a fiscal consolidation approach.

The proposed fiscal consolidation approach, anchored on the ‘hard-budget principle’, seeks to increase revenues on the one hand and on the other, reduce the expenditure portfolio. Achieving this is another issue altogether, but it is utterly evident that the push for improving the tax-to-GDP ratio is a key cornerstone of the government’s fiscal approach. The Kenya Revenue Authority (KRA) has consistently fronted the idea of expanding the tax bracket as opposed to deepening it. Development should, ideally, be a shared burden and not an overburden to a section of the citizenry.

The latest census results indicate that Kenya’s population stands at 47.6 million people. Further, numbers from the 2022 General Election, posted by the Independent Electoral and Boundaries Commission (IEBC), show that more than 22 million voters voted in the August 8 General Election. Analysing these numbers, if all these voters were registered as taxpayers, the expectation would be that at least 22 million Kenyans would be filing their annual tax returns.

In 2019, KRA’s database indicated that there were about 10.6 million Kenyans with Personal Identification Numbers (PINs). Further, the data indicated that only 5.8 million taxpayers are registered on the iTax platform, and only 3.6 million Kenyans filed their annual income tax returns by June 2019. President Ruto, last year, while comparing the number of persons on the M-PESA platform to KRA’s iTax, noted that while 30 million Kenyans are registered on M-PESA, only seven million Kenyans are registered on KRA’s iTax.

Based on the above, it is clear that Kenya’s biggest problem is tax compliance, which ordinarily has resulted in shortfalls in revenue targets. KRA has continually reported that it is failing to hit the revenue targets. This, coupled with the ballooning debt burden, continues to pose budgetary constraints to the country.

A country’s economy is largely dependent on taxation. Taxation is a patriotic duty premised on the cardinal principle of democracy — a government for the people, by the people and of the people. With this appreciation, any person in Kenya (permanent or non-permanent), who has attained the age of majority (18 years) and is engaged in any gainful economic venture is required by law to pay some form of tax.

The taxman has constantly opined, and the numbers actually show, that the number of Kenyans who pay taxes represents only a small portion of the potential taxpayers. This is indeed a disturbing trend, which only points to one thing — a small portion of the Kenyan population is burdened with driving the economy, and their contribution is not sufficient to fund the national budget.

Indeed, there is a need to expand the tax base to meet Kenya’s revenue target to meet the country’s ever-growing fiscal needs. The moves by KRA to leverage technology, amplify tax education and incentivise taxation measures are welcome. Nonetheless, political goodwill is essential for their success. The political class needs to appreciate that emotive as it seems, taxation is the primary way the government raises revenue to ensure services are available to the people. In the same vein, the government needs to be sound and prudent on its spending, and actually prioritise service delivery as that is the only incentive a taxpayer can easily relate to.