Entry Instance

HTTP 200 OK
Allow: GET, PUT, PATCH, DELETE, HEAD, OPTIONS
Content-Type: application/json
Vary: Accept

{
    "id": 1438658,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1438658/?format=api",
    "text_counter": 146,
    "type": "speech",
    "speaker_name": "Prof. Njuguna Ndung’u",
    "speaker_title": "The Cabinet Secretary for the National Treasury and Economic Planning",
    "speaker": null,
    "content": "unique and heterogeneous needs. The National Treasury has established the Kenya National Entrepreneurs Savings Trust (KNEST) to handle pension from the informal sector and anchor the savings component of the Hustler Fund while providing a channel for voluntary savings. Let me turn to insurance reforms. To facilitate the growth of the insurance sector, the Government developed a National Insurance Policy. This policy is guided by the review of the Insurance Act, which has served its purpose albeit with progressive amendments for the last 30 years. The Insurance Professionals Bill, 2024 which is currently under consideration by this august House, will also strengthen the standards of practice in insurance and improve the stability and performance of the insurance companies. I now turn to the fiscal framework. The Government's Fiscal Policy is to enhance fiscal consolidation efforts to reduce debt vulnerabilities and rebuild fiscal buffers amid significant global and even domestic challenges. These external and domestic shocks that Kenya has experienced serve as a reminder of the importance of fiscal buffers. The focus of our fiscal policy thus remains to reduce the deficit from 5.7 per cent of GDP in the current Financial Year to 3.3 per cent in the Financial Year 2024/2025. We are going to do this through various means. First, domestic resource mobilisation. Implementation of the Government's plan for rapid and inclusive socio-economic transformation largely depends on a robust revenue growth rate. Indeed, despite significant Government investment in reforming the tax structure, the tax to GDP is estimated at 11.5 per cent of GDP as of 2022/2023 against an estimated potential of 25 per cent of GDP. This is also the convergence criteria in the East African Community countries. We, therefore, urgently need to address the challenges that negatively affect our revenue collection. Some of these challenges include: 1. There is an existence of hard-to-tax sectors. The economy is dominated by a large informal sector that is mostly outside the current tax instrument leaving the country to rely on a narrow tax base and it is time to reverse this trend. 2. Proliferation of tax expenditures over the years. Tax expenditures are estimated right now at 2.9 per cent of GDP, if you consider the 2022 data. That is a major erosion to the tax base. 3. Low tax compliance, largely attributed to factors such as the technical and complex nature of our tax procedures. Taxpayers’ apathy due to perceived inefficient use of tax revenues, high compliance costs and inadequate taxpayer education. 4. There are difficulties in taxing the emerging digital economy. The tax system is not fully equipped to deal with the emerging business models that leverage on digital technology. 5. Inadequate modern technology equipment for use at every stage or exit border points, mis-declaration and even mis-classification of goods, inadequate customs border posts, infiltration of counterfeits, smuggling and diversion of goods. Hon. Speaker, to address these challenges and enhance revenue mobilisation, we shall implement a combination of tax policy and administrative reforms. The reforms are premised on the need to ensure that taxes are more supportive of economic activity. They do not distort the market and have a predictable tax structure. The reforms include: 1. Implementation of tax policy and administration measures proposed in the Finance Bill, 2024. 2. Implementation of the medium-term revenue strategy to expand the tax base to 20 per cent of GDP over the medium term. 3. To strengthen the tax administration for enhanced compliance through leveraging technology to revolutionise tax processes, sealing revenue loopholes and enhancing the efficiency of the tax system. The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."
}