How Kenyan gov't can raise revenue without taking loans: Rights body details

In a statement on Tuesday, the human rights body explored alternative options for President William Ruto's administration instead of borrowing more loans from either the International Monetary Fund (IMF) or World Bank. 

The financial institutions have been accused of listing tough measures to countries that acquire loans which places more economic pressures on the middle and low income class. 

One of the ways President William Ruto's administration can raise additional revenue is to introduce tax reforms that would enforce the current tax rules. This would eliminate cases of tax avoidance and tax evasion from high-level officers. 

Tax avoidance is when a taxpayer uses legal means within the law (loopholes) to pay less taxes while tax evasion is when a person or company escapes paying taxes illegally. 

A report by the United Nations Committee on Economic, Social and Cultural Rights revealed that Kenya contained a large amount of illicit financial flows and tax avoidance cases that are not thoroughly investigated. 

Further, a bulletin by the Kenya Revenue Authority (KRA) revealed that over 1,309 individuals and companies have engaged in tax evasion schemes amounting to loss worth Ksh.259 billion.

Another measure includes sealing loopholes of mismanagement and corruption in the government to ensure every coin raised as revenue is spent on its intended purpose.

This has also been one of the measures advocated for by the Gen Z protestors who accused of government officials of living a lavish lifestyle at a time when the cost of living is high. 

The final measure involves increasing taxes on the wealthy to raise additional revenue. 

A report by the Tax Justice Network ranks Kenya among the countries that loses Ksh.24 billion annually in global tax abuse mainly committed by multinational corporations owned by wealthy individuals. 

Human Rights Watch advocated for the government should assess every condition enforced by IMF programs to ensure they don't infringe on human rights. 

"Economic sustainability can only be achieved with a new social contract that raises revenues fairly, manages them responsibly, and funds services and programs that allow everyone to realize their rights,"  Sarah Saadoun, senior researcher on poverty and inequality at Human Rights Watch, said. 

President Ruto said that his government would seek Ksh.180 billion in expenditure cuts and borrow Ksh.169 billion to recover the amount that was to be raised by the Finance Bill 2024. The bill was dropped after government yielded to public pressure. 

"The IMF should revisit its targets to ensure that it is not impeding the Kenyan government from meeting its human rights obligations and ensure that any policies enacted to achieve program targets do not exacerbate poverty and inequality or undermine rights," Human Rights Watch said.