As the fateful time approaches when the Kenyan government will announce new taxes for the 2024-25 fiscal year, civil society, labour associations and the public are already abuzz with rumours of new taxes and an ever tighter fiscal regime.
According to President William Ruto, all this is necessary to break free from the grip of public debt, given certain deadlines for past and new interest payments, particularly with China (which holds 25 per cent of the total Kenyan debt), the US and international banking institutions.
The World Bank and the International Monetary Fund (IMF), in this regard, are giving contradictory signals to the Kenyan government on how to proceed with the taxation of Kenyans.
The former has warned the government in Nairobi that with new taxes and particularly the proposed gradual increase of the tax rate to 24%, the confidence of foreign investors could be undermined.
The IMF, on the other hand, praised Ruto's moves for the coming financial year, calling them inevitable and right for a developing country that needs to ‘broaden the tax bracket’ to be modern.
Let's skip the ethics and stay in everyday Kenya: Kenyans are already buzzing about some announced increases. First, that of bread and other basic necessities, then there is the coming into force of a sort of ‘vignette’ for cars that will be paid according to the value of the vehicle.
Finally, there is the question of the tax rate.
The opposition has promised that it will not be soft and compliant this year either. Recall that the spring of 2023 was very hot. On the eve of last year's budget, one of the main bone of contention was the price of maize meal, a staple food for Kenyans, then there was the cost of petrol. The government had blamed the Russian war in Ukraine, this year it could also add Israel's war in Gaza.
Recriminations and alibis aside, the important thing is not to return to street protests and the violence that always ensues, at a time that is already complicated after the floods and the government's decision to demolish several areas of Nairobi, i.e. all the informal and untitled dwellings that stand 30 metres from waterways. Kenya's capital is a city of rivers, three of which (Nairobi River, Mathare River and Ngong) flow through slums and working-class neighbourhoods.
Should the people be in the streets and the opposition return there to protest, there could be even more damage and casualties than last year, when 30 people were killed and over 300 injured across the country.
It has to be said that the coast and tourist areas, both sea and safari, were not affected by the protests, nor are they likely to be this year. But it is also true that a new fiscal squeeze affecting the poor people, starving them, besides being the exact opposite of what should be done, would not be good for Kenya's peace and security.
We will see what happens, the indications of the country's ‘capital partners’ and the decisions the government will take will be decisive. As always, we will keep you updated.