President William Ruto and his predecessor Uhuru Kenyatta implemented various measures that disrupted the operations of wealthy Kenyans and investors in the country.
Under both regimes, the super-rich felt the heat of the proposals which made their net worth dwindle or remain steady.
After serving for less than 12 months, President William Ruto's rein has already affected the lifestyles of some super-rich individuals, especially after the introduction of the Finance Bill 2023.
Housing Fund
The introduction of mandatory salary deductions under the Affordable Housing Programme was anchored in both Uhuru and Ruto's manifestos.
In 2018, Uhuru advocated introducing a 1.5 per cent levy on all employees to support the Affordable Housing Programme. The deduction was to be applied uniformly, even to the super-rich.
In 2019, the court halted the plan, saving ordinary Kenyans and the wealthy from more deductions.
On Wednesday, June 14, the Kenya Kwanza reduced the levy from 3 per cent to 1.5 per cent but proposed removing the Ksh2,500 cap.
While tabling the Finance Bill 2023, the Finance Committee chairperson Kuria Kimani announced that the cap would be scrapped and the levy turned into a tax.
That meant Kenyans earning more, including the super-rich, would contribute more to the kitty, way above the Ksh2,500 cap.
"We listened to the views of these Kenyans and we propose a 1.5 per cent deduction for both employer and employee. It is important to note that the Ksh2,500 capping has been removed," Kimani stated.
Purchase of Helicopter
Unlike his predecessor, the wealthy can sigh with relief under President Ruto's governance after he waived the aircraft import tax.
In the Finance Bill, President Ruto’s administration proposed to exempt importers of aircraft, especially choppers, from paying the 16 per cent Valued Added Tax (VAT) while scrapping the 3.5 per cent import declaration fee (IDF) and the two per cent Railway Development Levy (RDL).
The directive was interpreted as favouring the super-rich but Ruto defended the proposal noting that it was key to creating employment opportunities in the aeronautical sector.
“I saw many people saying this is about the president and his friends who have helicopters. But this was because Wilson Airport, I think, is the third or fourth busiest airport in Africa and its main work is repair and maintenance. We have a very big ecosystem of engineers and people who work in the aeronautical field who had shifted base to Tanzania and Uganda because we imposed these taxes.
“We lost business and almost shut down Wilson Airport. The same industry players at Wilson came to plead with me and it was purely because we are protesting jobs and our business,” Ruto stated.
Proposals on Media Owners
Under Ruto's regime, the Finance Bill proposed introducing a 15 per cent excise duty on advertisements. Additionally, it proposed a 15 per cent withholding tax for digital content creators revised downwards to 3 per cent.
Investors in the media sector opposed the move noting that it would affect their businesses which are already struggling to remain afloat.
Under Uhuru's regime, they enjoyed low deductions on advertisements supplementing their sources of income.
Government-to-Government Fuel Plan and 16 Per cent VAT on Fuel
To address the high cost of fuel and alleviate pressure on the dollar, President William Ruto signed a deal with Saudi Arabia for the supply of fuel.
Oil marketers, who form part of the Kenyan super-rich, initially opposed the plan arguing that the government sidelined them in bidding.
Besides protesting the move, other entrepreneurs opposed the proposal to raise VAT on fuel products from 8 to 16 per cent. Investors in the sector argued that the move would compel them to raise transportation costs in the country due to the high cost of shipping the product.
However, Ruto noted that the money would help his government support infrastructural projects in the country.
"The 8 per cent will give us Ksh50 billion to deal with roads across the country," Ruto stated.
Uhuru used a different a model where he introduced subsidies to cushion Kenyans from high fuel prices. He also paid marketers to help his administration maintain a stable fuel supply in the country.
Tax Proposal in the Manufacturing Sector
Super-rich who enjoyed a conducive business environment under Uhuru's rule opposed plans to introduce the Finance Bill 2023.
During a public hearing forum, the Kenya Association of Manufacturers (KAM) warned that the country stood to lose up to Ksh150 billion due to a mass exodus by foreign and local investors.
Further, the Kenya Private Sector Alliance (KEPSA) cautioned over 100,000 job losses.
Their concerns were backed by various reports claiming that investors fled the country due to taxation regimes.
Similarities
Despite each President adopting different strategies to run their administrations, Uhuru and Ruto shared some policies that disrupted the lifestyles of the moneyed individuals.
In 2018, Uhuru launched a crackdown on tax evaders, especially deep-pocketed individuals and directed that the revenue remittance should match lifestyles.
"High net worth persons whose lifestyles are not reflective of the taxes that they pay must be compelled to demonstrate the source of their wealth and to contribute their share of taxes accordingly.
"As a consequence, we have in the recent past taken steps to widen the tax base and seek the implementation of more broad-based taxes as a means of bringing more Kenyans into the tax net," Uhuru stated at the time.
On September 2022, Ruto proposed the introduction of a Wealth Tax, which had failed to receive Parliamentary support under Uhuru's reign.
Ruto told Parliament in his inaugural speech on the floor of the House that his government will seek to raise taxes from the wealth accumulated by the richest Kenyans over getting revenues from workers and traders.
This tax would be based on a person’s net worth after deducting their liabilities and only apply to the richest citizens. In the proposal, Ruto sought to apply the new taxes on the property such as real estate, cash, investments, business ownership and other assets.
"The economic principles of equitable taxation require that the tax burden reflects ability to pay. This is best achieved by a hierarchy that taxes wealth, consumption, income and trade in that order of preference. Our tax regime currently falls far short of this," Ruto stated.
"We are over-taxing trade and under-taxing wealth. We will be proposing tax measures that begin to move us in the right direction," he added.
