Nairobi — President William Ruto has directed Treasury to work with the various ministries to raise Sh300 billion in a bid to reduce the country's debt.
President Ruto was speaking during his maiden speech to the joint sitting of the bicameral house at the National Assembly where he stated that "next year, we will bring it further down so that, by the third year, we have a recurrent budget surplus."
He further indicated that on the revenue side, his government is committed and determined to ensure that the tax system is responsive to the needs of the economy.
"It must be equitable, efficient and customer-friendly. The economic principles of equitable taxation require that the tax burden reflects ability to pay," he said.
"This is best achieved by a hierarchy that taxes wealth, consumption, income and trade in that order of preference. Our tax regime currently falls far short of this. We are over-taxing trade and under-taxing wealth. We will be proposing tax measures that begin to move us in the right direction."
He also indicated that the government will also work with the Kenya Revenue Authority (KRA) on a culture change to make it a people-friendly, customer-centric organisation.
"I am of the view that we should rename it the Kenya Revenue Service in line with the proposed transformation."
He stated that the very large Government borrowing requirement has also undermined the business sector contribution to the national savings and investment effort.
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"These measures outlined above will also address the problem of government crowding out the private sector from the credit market. It will encourage banks to go back to lending to businesses and also bring down interest rates so that the private sector can also contribute to reducing the savings-investment deficit," he stated.
"In many countries, social security and particularly pension system contributes significantly to the national savings. Our current social security infrastructure, both public, that is NSSF, and private only cater for people in formal employment, thereby excluding the vast majority of working Kenyans," he explained.
He also highlighted the plight of Kenyans whom he stated are living on their NSSF retirement benefits.
"The meagre current contribution of Ksh200 a month adds up to Ksh72,000 over 30 years. There is no rate of return on earth that can grow this into an adequate pension," he said.
"Not surprisingly, many Kenyans scramble to provide for themselves by investing in 50 by 100 plots of land, thereby exacerbating the problem of land fragmentation, price inflation as well as land fraud."
