Kenya’s economy is turning a corner with a steady drop in inflation and a strengthened currency, President William Ruto revealed in a significant address on Taxpayers’ Day at State House.

In October 2024, inflation levels fell sharply to 2.7 per cent from 9.2 per cent two years prior, marking a period of stability driven by favourable weather, stable fuel prices, and fiscal prudence.

Alongside inflation control, Kenya’s currency has gained ground against the US dollar, moving from Sh160 in January to Sh129 by October this year, while the GDP recorded a notable rise to 5.6 per cent in 2023 from 4.9 per cent in 2022.

To sustain and build upon these economic gains, Ruto outlined a detailed agenda for advancing Kenya’s tax system, emphasising fairness and inclusivity.

“Our collective efforts are yielding positive results,” he said. “This stability resulted from favourable weather, consistent fuel prices and deliberate fiscal measures.”

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Calling for an equitable approach to tax revenue, the president noted, “Our tax measures must be fair, and every eligible entity must pay.”

He stressed the need for mutual benefit between the government and taxpayers, where sound policies and efficient public investments pave the way for job creation and wealth generation.

With trade recognised as essential for Kenya’s economy, Ruto highlighted recent improvements to streamline business processes and attract both local and international investors.

Simplifying the tax system and strengthening partnerships among the National Treasury, the Kenya Revenue Authority (KRA), and other stakeholders are part of a strategy to support small and medium-sized enterprises.

Kenya currently falls short of the East African Community’s 25 per cent GDP target for revenue collection, with efforts now focused on raising the collection rate from 14 per cent to 22 per cent over the next decade, while also increasing tax compliance from 70 per cent to 90 per cent by the 2026/2027 financial year.

The informal and digital sectors remain challenging to tax but offer significant potential, Ruto stated, calling for “collaboration, innovation and determination” to bring these sectors into the tax net. Modern technology is also key, as automated systems and digital tools will help improve transparency, cut costs, and enhance efficiency.

“Through effective use of Artificial Intelligence, machine learning and the new Gava Connect API, KRA will enhance service delivery, transparency and tax evasion detection,” he affirmed.

The recent Tax Base Expansion Strategy has already yielded substantial gains, generating Sh24.6 billion in the 2023/2024 financial year and adding 1.2 million new taxpayers, including landlords through the Blockchain Management System and the Monthly Rental Income programme.

In addition, the implementation of the Electronic Tax Invoice Management System has been instrumental in reducing VAT fraud, raising Sh314 billion from over 280,663 VAT-registered taxpayers.

Ruto took a moment to commend Kenya’s citizens for their commitment to tax compliance, acknowledging the filing of 8 million tax returns by June 30, 2024—an achievement that surpassed targets by 26 per cent.

He extended particular appreciation to two KRA commissioners, Dr. Lillian Nyawanda and Risper Muthoni Simiyu, for their exceptional performance in surpassing their tax collection targets by 102 per cent and 105 per cent, respectively.

“Tax compliance is not only a legal and civic duty but also signifies our shared commitment to contribute towards national transformation,” he said.

Looking ahead, Ruto emphasised the need to combat tax evasion and corruption, which continue to challenge Kenya’s fiscal stability.

“Tax evaders should not be allowed to hide resources owed to Kenyans while benefiting from public services," he insisted.

His closing remarks underscored a vision for Kenya’s economic future built on trust, accountability, and a renewed sense of patriotism, where “better infrastructure, inclusive services, and increased wealth and job creation” lay the groundwork for accelerated national transformation.