EDITORIAL: Lessons from Kenya’s tax hike uprising

A raft of fiscal reforms by President William Ruto of Kenya, aimed at increasing the country’s revenue to address its mounting fiscal challenges, has got the East African nation rumbling since last month. A Finance Bill with a new tax regime being considered by the parliament had provided the trigger. The Bill has however been dropped as a wave of nationwide protests it set off was capable of consuming the country and government.

Faced with a daunting debt burden of $80 billion, which had compelled the government to use more than half of its annual tax revenue to service it, the administration had proposed a hike of the Value Added Tax (VAT) to 16 per cent. This would have certainly spiked the costs of essential commodities like bread and sugar. Also, the fiscal proposal included a hike in the excise duty on vegetable oil, while a 2.5 per cent motor vehicle tax and eco levy on locally manufactured goods, such as sanitary pads, were part of the revenue reset template under consideration.

Youths who orchestrated the mass action have been jobless, hungry and angry, and already reeling under the high cost of living conditions in the country. They saw these fiscal measures as draconian and, therefore, unacceptable. Not unexpectedly, the official response was repression, epitomised in the arrests and killings by the military and police that subsequently took place. Yet, these actions were not enough to cow the protesters. Ultimately, Ruto had to concede, and this was quite telling: in a democratic milieu, the primacy of the popular will should never be toyed with.

The national tinderbox had been stoked by the agitators’ perception that the proposed policy regime was essentially at the urging of the International Monetary Fund (IMF), and it was regarded as a hemlock that the president was trying to force down their throats. True, the IMF had advised Kenya to double its revenue, which it viewed as crucial in dealing with the country’s debt overhang. Across Nairobi, the capital; Mombasa; and other cities, thousands on the streets screamed that excessive taxation would cripple already struggling businesses across Kenya.

International Monetary Fund [IMF]

It was not only the President who was taken aback by the ferocity of the resistance. The Parliament was invaded, with its mace – the symbol of authority – taken away, while the lawmakers took to their heels. Part of the building was torched, just as the hungry protesters helped themselves with food at the parliament’s cafeteria.

As the President capitulated, he was quick to remind Kenyans of the implication of their pushback against the raising of additional funds for the state: the need to secure a $7.6 billion foreign loan, “To be able to run our government.” This represents a 67 per cent increase, more than what was originally planned if the new fiscal measures had been allowed.

The toll, in terms of lives lost during the protests, was heavy. The Kenya National Commission on Human Rights (KNCHR) reports that 39 people were killed in the course of the uprising – 17 in Nairobi and 22 in other places. Also, some 362 persons were injured, while 627 arrests were made. The dead are gone forever. The vandalised legislature will need money to be fixed, alongside the restocking and revamping of looted shops, whilst the man-hours lost to the crisis were deleterious to the economy.

However, Ruto is arguably facing the Alex de Tocqueville effect. The worst time for a bad government, the philosopher/historian argued, is when it begins to reform or make concessions. The surrender has provided more armour to the rioters, who now want him to resign immediately. Incapable of coping with public fulmination over his role in the police’s brutal overdrive, the Inspector of Police, Japhet Kroone, resigned last Friday.

Other calls in the citizens’ 14-point charter of demands include: a proper audit of the national debt; slashing of the salaries of lawmakers; scrapping the Offices of First Lady, which the constitution does not recognise; obeying all court orders; cutting the budget of the Executive/Legislature; and increasing the funding of education and health.

Also, the requests include ending the state capture of the judiciary; paying better salaries to teachers and medical doctors; and sacking government officials with criminal records or integrity questions. Ruto may have responded to this last demand with last Thursday’s dissolution of the cabinet, with only the Foreign Affairs Minister remaining in office.

Kenyan President William Ruto (PHOTO CREDI: @WilliamsRuto)

Lessons are packed full in the Kenyan anomie for Nigeria, both for the authorities and the youth. The similitude is pretty obvious. In Lagos and other major cities in Nigeria, discontent has been simmering over the massive hunger in the land, the rising cost of living, the uptick in food and headline inflation and the lack of jobs. A few non-violent street protests have already been staged.

But fears that these agitations might degenerate sooner than later are palpable. But they shouldn’t. The 2020 #EndSARS violent protest over police brutality and extra-judicial killings nationwide did not resolve the bestiality beyond the hypocrisy of scrapping the callous police unit, while its members remained in the system to continue perpetrating their evil – a case of old wine in a new bottle.

Instead of resorting to violence, in fixing existential challenges, our youths can advance the political struggle by participating actively in politics. They should join political parties and seek democratic accountability from within, as their peers in Western democracies often do. Political parties should be veritable platforms to be exploited or organised to evolve candidates who share the aspirations of the youths, who should then come out en masse on election days to cast their ballots to make a huge impact. Indications of how successful this can be, were recorded in the just concluded UK and France general elections.

In the UK Parliament, for instance, is a 22-year-old Sam Carling, elected on the platform of the Labour Party. He told the BBC in an interview shortly after his victory that, “No one has yet been able to explain to me why being older makes you better at the job.” This is undoubtedly so. He defeated an incumbent to become the youngest MP in the country, after having served at council levels for many years.

President Bola Tinubu should not fall into the trap that Ruto set for himself, by not opening widely the door for dialogue and being intolerant of dissentient views. Having removed fuel subsidy on 29 May, 2023, hiked electricity tariff this May from N68 per kilowatts/per hour to N225 per kilowatts/per hour for band A customers, which is about a 300 per cent increase, in appeasement of Bretton Woods Institutions, the administration should cautiously handle promptings to ramp up VAT from its present 7.5 per cent to 10 per cent. The Presidential Committee on Fiscal and Tax Reforms has made this recommendation. It sounds like good economics, but it is evidently laden with socio-political dynamites.

READ ALSO: Kenyan President Ruto sacks cabinet after mass protests

A growing concern is food insecurity, with the new minimum wage crisis still unresolved, more than a year after his economic policies devalued the naira. The national public debt is on the rise. From N97 trillion on 31 December, 2023, it had reached N121.67 trillion or $91.46 billion by 31 March, according to the Debt Management Office (DMO). Last week, the NNPC declared its intention to secure a fresh $2 billion loan to be repaid through a crude oil deal, just as the questioned Afreximbank $3.3 billion facility. This will balloon the debt stock to $93.46 billion, and it is not cheery news at all.

The administration will do a lot of good to itself if it could embrace transparency and accountability in managing the treasury, cut costs, tighten its belt, block leakages, and recover stolen funds without fear or favour. These are public confidence triggers that would also soothe frayed nerves, which no government can avoid in troubled times such as this.