Ndung’u: Taxes will kill goose that lays golden eggs
By Rawlings, October 19, 2022
President William Ruto’s Cabinet nominee for the National Treasury and Economic Planning docket, Prof Njuguna Ndung’u, has warned against increasing taxes that will push the cost of living to high levels.
Instead, he encouraged the Kenya Revenue Authority (KRA) to tax areas where there is a boom to increase the government’s revenue.
The former Central Bank of Kenya (CBK) governor, who was appearing before the Parliamentary Committee on Appointments, said the taxes being collected by KRA should not distort the market. He said KRA should not create incentives for people to run away from taxes.
“Do not increase the rates to the point that it becomes an inducement for one to evade paying taxes. That way, you are killing the goose that lays the golden egg,” he said.
“We should learn how to deal with supply-side shocks; it was a problem during my time at CBK. We should ensure we have fiscal space to ride over the shocks”, he said.
Ndung’u noted that the drought effect in Kenya has been a catalyst in driving domestic and energy prices high, adding that the best way to offer reprieve to Kenyans is to look for concessional financing that would retire the expensive domestic debt.
“The other day I asked KRA why they believe that high taxes will yield high revenue when the whole world knows that the converse is true … If you find yourself in a hole, stop digging. The dollars in Kenya are owned by individuals, not Kenya”, he said.
The economic expert parried a question on the legality of the National Government – Constituency Development Fund (NG-CDF), and exonerated himself from the controversial cancellation of a 2008 tender to print new-generation bank notes.
Also, he defended himself over alleged inaction even as a series of banks collapsed, and sustained weakening of the shilling during his tenure at CBK.
He said his net worth is roughly Sh950 million.