David Ndii Will Be Ruto's Nail in the coffin

[Kadudu]

 

Did you expect anything to come out of this? Come on! Ruto cannot establish a commission of enquiry to investigate himself. Ruto was second to Uhuru as a financial beneficiary of the 10 years Uhuru was in power. One cannot perpetuate to investigate Uhuru without his then deputy being pulled into the saga.

I know they will say, Raila was the "DP". Did we hear even one financial scandal where Raila's name was mentioned in the 10 years of Uhuru?

Ndii has to stop abusing the very taxpayers that are paying his salary and he needs to be able to explain economic terms in a simple way that a mama mboga or boda boda driver can understand. Ndii is NOT an entrepreneur generating his own revenues. He is living off taxpayers money. He is not Elon Musk.

He should stop assuming that the average kenyan is a graduate student at Oxford or even wants to get their Ph.D in economics like him.

If Ndii CANNOT explain what he is doing, then Ruto as the president, needs to come out and explain to the kenyan people (in Swahili) what his goal is here. Ruto should not leave it up to Ndii.

Also, what happened to the state capture commission that Ndii was screaming about every night? where is it? If uhuru left the country in debt, they should go after him.

[mankind]

Now try summarize everything collectively to a person earning 20k per momth , remember increase of all those taxes factoring 10% inflation and increase of consumer goods due to increase in cost of production and transportation will result into cost of living increasing .
Mind you salaries are not increasing and the opposite is happening . Retrenchments and salary reduction is happening .

Apart from the populism associated with protests most folks can't tell you how any of the tax policy proposals affect them. Everyone is busy shouting how taxes are killing them while majority don't pay any taxes and most don't pay taxes on some of their incomes derived from informal sources. I tried to do a simple cost analysis on the effects of the bill on a common person and found very little to shout about. One of the taxes that results in a fuel cost increase does so by about 7 shillings a liter. An average car consuming about a liter for every 13-15 km would thus incur about 200-500 extra shillings a month driving a total of 22 working days 30 km each way. I drive to Kitale and back to Nairobi on my small Toyota Ractis with a 40 liter gas tank and I have never used more than 80 liters or two full tanks for the journey.  On import duty increase by 5% the cost comes to about an extra 5000 bob for every 1 million shillings. On Internet and money transfers the increase is about 200 bob a month on a 5000 shillings data plan and I have to cross check my math an increase by a shilling or less per every 1000 for money transfers. On the motor vehicle tax if you were to use 5% per annum on a 10% depreciation on the value of a car then a car worth 2 million shillings would be subject to ksh 100k then drop by about 5k every year. Sanitary pads increase by 8 bob a month and bread by 10 bob comes to 300 bob a month . Bottom line is there is a cash crunch in Kenya as a result of pending bills and debt repayment but the tax measures are not as drastic as folks are being made to believe. My two cents

   I just perused through what someone had summarized on Twitter yesterday and was using that information to calculate the figures. If I have time later I can try going through each proposal and try costing it. Now it's true there's inflation and salaries not keeping up but still there's not much going on there to warrant the protests apart from populism by the politicians and the young folks who have realized they can make money by creating content. I had a conversation with my nephew who is turning 26 and got the usual Ruto is killing us with taxes. Mind you the boy's dad is my younger brother here in the US and so the son is not working but stays with the rest of the family in kitengela. So he's definitely not paying taxes but he's been fed the bull shit and is now singing the same tune. I asked him to explain how/ what if any is going to affect him and he didn't know. That is where most folks are just shouting without anything to show why they are protesting. Let's try a few numbers. Someone with a 20k salary is definitely not driving but using a matatu so an increase of 7 bob on fuel costing 15k a day at say 200 bob a liter from 193 bob translates to about 78 liters a day thus 78 times 7 =ksh 546 a day increment. If you divide that figure by the number of trips and passengers then average it we are talking probably 10 bob per person per trip maximum. Let's go to housing levy at is it 1.5%. Assuming it is calculated on the total salary before deductions we end up with 20k times 1.5% equals 300 bob a month. Now there's a reward for that money in that now that person can qualify for a low income house that otherwise is out of reach currently in the market. It's no different from joining a sacco then after contributing for a couple of years then you get financing from the same sacco. The only difference is that the financing will come in form of a mortgage backed by the government thus very low interest rates plus down payment as opposed to the market rates. In other words it is a wealth creation. In the west including the US owning a home is one way of building wealth through equity. Back to the same 20k guy paying what 3% for health insurance. Assuming it is based on gross salary again that would be 20k times 3% translating to 600 bob a month or ksh 7200 a year. But think about what they are getting in return, freedom from having to worry about hospital bills. Aren't you tired of invitations to Whatsapp groups za mchango for so and so for hospital arrears? I hate to compare Kenya with us here but I tell you we have insurance to cover our funeral expenses hakuna mambo ya michango. I hated it the first few months after arriving in college and the next thing I had was mail saying.... Have you thought about your burial expenses and not having to burden your kin when you die bla blah... Well I was 25 then but today that mail doesn't sound weird at all. In a nutshell there's not much to protest about one people are well informed on the benefits of the tax proposals. Unfortunately in Kenya everything is politicized and the experts in the relevant Fields are so elitist when they are called to explain things in simple language they can't.

[RV Pundit]

mankind paragraph please.

[mankind]

 Pole Pundit and other netters. I mostly write from my cell phone in a hurry so most of the time I don't get to preview or edit. I just hit post when am done. Well I have a tough job but feel an obligation to contribute when I think it's something within my ream

[sema]

Pundit?

State capture commission iko wapi?

[RV Pundit]

Understood.
Went back and read.
We are in sync
To transform gov need a little dictatorship
Because the fruits will not be apparent now but later.

Pole Pundit and other netters. I mostly write from my cell phone in a hurry so most of the time I don't get to preview or edit. I just hit post when am done. Well I have a tough job but feel an obligation to contribute when I think it's something within my ream

[gout]

You are contradicting yourself. You say the finance bill will have no impact on Kenyans incomes, which means no additional KRA revenues but you don't want it rejected?? Why the finance bill nonsense. The 23/24 seems to have done little to increase KRA collections of KShs 2.166 Trillion recorded in 22/23 except create Housing and SHIF corruption slush funds which no one seems to get what is going on.
Consumption of petrol, diesel and kerosene used  dropped to 2.28 billion litres in six months to Dec 2023 from 2.4 billion litres consumed in the second half of 2022 due to the taxes. This is for a said growing economy 

Everyone seems to blame the JOBLESS kids for their joblessness while we are paying trillions each year which were stolen and no one is willing to audit the theft. The manufacturers are crying they have been closing and relocating since 2015 due to crazy tax policies and extortions.

Your cousin is right the taxes are killing him. What is a life for an adult without a job, who only has to keep begging while we have those been paid by the taxes are living in Geneva luxury as their kids and mistresses showing off obnoxious lifestyles on Instagram.

Pole Pundit and other netters. I mostly write from my cell phone in a hurry so most of the time I don't get to preview or edit. I just hit post when am done. Well I have a tough job but feel an obligation to contribute when I think it's something within my ream

[mankind]

 Gout I didn't say that the bill doesn't affect folks anywhere. I thought I elaborated that the impact is not as big as it is made to look. That is what the cost analysis shows. Now if you want to discuss specific aspects and their impact that is fair game but we can agree that when someone shouts fire then at least there should be at least smoke ama?

  As I explained earlier pending bills have really wrecked the economy by creating a cash crunch. I personally know of so many folks whose assets have been auctioned for less than half of what they owe institutions. I had a water bowser supplying water to the Chinese constructing the Lodwar Lokichar segment of the northern corridor and despite finishing the work last March we've not been paid. Now imagine if I passed on the problem to the driver, the mechanic, the tire shop etc. You can clearly see where the problem is coming from. The other issue is debt and that is why the IMF is packed at treasury. Most of the money collected was going to debt repayment and recurrent expenditure but still leaving a yearly budget deficit approaching a trillion shillings. It was just a matter of time before we defaulted.

  On matters corruption that one I personally gave up. It seems stealing in in our DNA and unless you destroy the majority of the population then it is a futile exercise. As the protests were going on yesterday Obado was let off the hook with a slap on the wrist. Accused of siphoning almost two billion shillings, He ended up surrendering property worth about 235 million shillings and no jail time. You get the joke now. I visit Dubai often in my line of work and it's no secret that most politicians are packing money there. I have personally met not less than 5 of them in the past year. An Egyptian friend of mine who works in those investment firms in Dubai told me he's never seen so much money coming in to buy stakes in Dubai real estate. Am not sure what if anything can cure that sickness.

  Finally as I pointed out there's a give and take here. We can't expect free education, good infrastructure and an improved standard of living without increasing our taxes either by taxing more or expanding the tax base. The only other option is to borrow which as everyone can see has its consequences. I saw you highlighted my tough job expression. It has nothing to do with what I was writing about. Was responding to Pundit there. I am a pilot so I sometimes will read something on my phone and decide to respond to it in a hurry when I get a chance. That is what I meant.

[sema]

Why is they a cash crunch?

Also, you mentioned Obado…Ruto has to go after the corruption otherwise, whatever he is doing won’t work!!

This is what Kenyans are telling him. They’re saying you are taxing us to death and most of this money is going to be stolen anyway so what’s the point of paying taxes and suffering while only a few politicians benefit from our sweat??

The taxes are enriching a few at the expense of 99%.

Ndii isn’t getting this either. They have to repatriate the stolen money back like Angola is trying to do!

[sema]

Understood.
Went back and read.
We are in sync
To transform gov need a little dictatorship
Because the fruits will not be apparent now but later.

Pole Pundit and other netters. I mostly write from my cell phone in a hurry so most of the time I don't get to preview or edit. I just hit post when am done. Well I have a tough job but feel an obligation to contribute when I think it's something within my ream

Rubbish. Ruto should be a dictator when it comes to curbing the corruption then. He’s turning out to be as useless as Uhuru.  Why aren’t you getting this? Unless they curb the corruption, nothing will change.

Kangombe the mp that killed someone is out free; Obado killed a pregnant woman out free; babu owino shoots someone, out free

[mankind]

  Every 1st year accounting, finance or economics student is taught that a government is the biggest spender thus driving demand for both goods and services anywhere in the world. Unfortunately governments don't run their own business so they only get money through taxation,fees,fines etc. With those funds they then pay recurrent expenditure in form of salaries, other expenses like debt and development. Folks receive salaries then pay other folks down the chain. You get nyama from your local butcher on credit then pay him when you get paid, he goes and pays the farmer for his goat,the farmer pays the vet for his services and the agrovet for chumvi and dewormer or dawa ya spraying ticks etc

  St each stage of the transaction the government collects some tax in form of VAT etc. From my earlier post out of every million shillings owed there's about 100k VAT. So the money cycle creates revenue. When the government doesn't pay as the first person at the top of the chain then you can see how it comes back to bite everyone including itself. But even with the cycle moving we still have a problem of debt eating into the revenues. Much of it was caused by the creation of county governments without a separate taxation measure to fund them. What we did was akin to a man marrying extra wives on the same salary. The national government has borrowed heavily since 2013 to plug the hole from the revenue going to the counties.

   On matters corruption I wish we could all have a change in attitudes. We shout thief until it's someone from our tribes then we claim persecution. Every corrupt individual moves to the opposing side of the side accusing them for protection. Am not so sure there's much anyone can do about that. Corruption in the counties is now worse than in the national government.

[hk]

The problem(disease) with kenya economy is government spending with symptoms being high tax rates, debts, pending bills, huge budget deficits and finally cash crunch. Its a fallacy that if pending bills were cleared cash crunch would be resolved. Demand side policy only offer short term stimulus e.g payment of pending bills. The aggregate demand of kenya economy is distorted by heavy government spending that's now affecting consumption and investment.  Government is single biggest buyer but in aggregate demand government in most healthy developing countries accounts for less than 15%. The rest is private sector, 80% is what needs to be robust to ease cash crunch, create jobs and build wealth.
Basically we're unwinding from LPO driven economy to production to and consumption. The era of supplier who only supply to government or parastals is over, government cant be the sole purchaser of any business. Government paying bills so that to collect taxes amounts to changing money from one pocket to the other.

[Higgins the genius]

The problem(disease) with kenya economy is government spending with symptoms being high tax rates, debts, pending bills, huge budget deficits and finally cash crunch. Its a fallacy that if pending bills were cleared cash crunch would be resolved. Demand side policy only offer short term stimulus e.g payment of pending bills. The aggregate demand of kenya economy is distorted by heavy government spending that's now affecting consumption and investment.  Government is single biggest buyer but in aggregate demand government in most healthy developing countries accounts for less than 15%. The rest is private sector, 80% is what needs to be robust to ease cash crunch, create jobs and build wealth.
Basically we're unwinding from LPO driven economy to production to and consumption. The era of supplier who only supply to government or parastals is over, government cant be the sole purchaser of any business. Government paying bills so that to collect taxes amounts to changing money from one pocket to the other.

HK, what's the percentage that the government accounts for in the aggregate demand?

[gout]

If we go by the govt figures of a 15 trillion GDP. The govt being biggest is hogwash and nothing but economic myth.

How can a govt using taxes generated from hasoras be an economic lifeline.

The issue is that the govt is a parasite, it sucks life out of the hasoras thus no growth in the real economy.  Bribes and pending bills are outright theft by govt. Debt is a bit covert theft.

[RV Pundit]

I have a problem buying an argument that an Africa gov that has yet to even civilize the whole of it should spend less.

Kenya gov should match the private sector in public investment of roads, dams, etc.

Until we are developed; there should be no argument; a paved road opens up the private economy.

I only agree that we should be careful on what how we spend - not fancy airports.

I also agree that public sector need to be TRIMMED thro privatization - the 700 or 300 SOES - we dont need them.

Once gov has trimmed all these extra fats - let them focus on BASIC INFRA, SOCIAL UTILITIES like Education, etc.

The problem(disease) with kenya economy is government spending with symptoms being high tax rates, debts, pending bills, huge budget deficits and finally cash crunch. Its a fallacy that if pending bills were cleared cash crunch would be resolved. Demand side policy only offer short term stimulus e.g payment of pending bills. The aggregate demand of kenya economy is distorted by heavy government spending that's now affecting consumption and investment.  Government is single biggest buyer but in aggregate demand government in most healthy developing countries accounts for less than 15%. The rest is private sector, 80% is what needs to be robust to ease cash crunch, create jobs and build wealth.
Basically we're unwinding from LPO driven economy to production to and consumption. The era of supplier who only supply to government or parastals is over, government cant be the sole purchaser of any business. Government paying bills so that to collect taxes amounts to changing money from one pocket to the other.

[RV Pundit]

1) I think everyone including is agreed GOK is a beast that need trimming - that is why they are finally privitisation.
2) Pending bills need to be fixed - otherwise gov procurement is broken - banks are broken - these people need to paid after being vetted - painful but neccessary. Ruto should just float the bond later for this.

If we go by the govt figures of a 15 trillion GDP. The govt being biggest is hogwash and nothing but economic myth.

How can a govt using taxes generated from hasoras be an economic lifeline.

The issue is that the govt is a parasite, it sucks life out of the hasoras thus no growth in the real economy.  Bribes and pending bills are outright theft by govt. Debt is a bit covert theft.

[sema]

demand of kenya economy is distorted by heavy government spending

HK and Pundit:

Now you are making sense, but my question is, has Ndii talked about curbing this government spending? I haven't heard it from him. All he keeps saying is that I warned kenyans about this debt and it must be paid through your taxes.

What is going on in Ndii's head is my question? The other thing is, these politicians need to stop thinking the kids on the street come from rich families. They're too many of them and kenya is a dirt poor country. These kids are urban poor from places like pipeline and huruman. The kids on the street are not from Muthaiga.

[Georgesoros]

demand of kenya economy is distorted by heavy government spending

HK and Pundit:

Now you are making sense, but my question is, has Ndii talked about curbing this government spending? I haven't heard it from him. All he keeps saying is that I warned kenyans about this debt and it must be paid through your taxes.

What is going on in Ndii's head is my question? The other thing is, these politicians need to stop thinking the kids on the street come from rich families. They're too many of them and kenya is a dirt poor country. These kids are urban poor from places like pipeline and huruman. The kids on the street are not from Muthaiga.

Kids need to see a future where they are able to afford to live. They actually dont see much going on except govt has become the sole employer and everything that goes with it. Unless they put money into the system, billionaires should pay higher taxes.

[hk]

The problem(disease) with kenya economy is government spending with symptoms being high tax rates, debts, pending bills, huge budget deficits and finally cash crunch. Its a fallacy that if pending bills were cleared cash crunch would be resolved. Demand side policy only offer short term stimulus e.g payment of pending bills. The aggregate demand of kenya economy is distorted by heavy government spending that's now affecting consumption and investment.  Government is single biggest buyer but in aggregate demand government in most healthy developing countries accounts for less than 15%. The rest is private sector, 80% is what needs to be robust to ease cash crunch, create jobs and build wealth.
Basically we're unwinding from LPO driven economy to production to and consumption. The era of supplier who only supply to government or parastals is over, government cant be the sole purchaser of any business. Government paying bills so that to collect taxes amounts to changing money from one pocket to the other.

HK, what's the percentage that the government accounts for in the aggregate demand?

Its about 25% of GDP. Since 33% of kenya economy is informal the ramificaations of huge government is stunting of private sector growth especially formal sector. Bangladesh which is comparable to kenya, government spending is below 15% .No wonder the country is rapidly developing.

[hk]

I have a problem buying an argument that an Africa gov that has yet to even civilize the whole of it should spend less.

Kenya gov should match the private sector in public investment of roads, dams, etc.

Until we are developed; there should be no argument; a paved road opens up the private economy.

I only agree that we should be careful on what how we spend - not fancy airports.

I also agree that public sector need to be TRIMMED thro privatization - the 700 or 300 SOES - we dont need them.

Once gov has trimmed all these extra fats - let them focus on BASIC INFRA, SOCIAL UTILITIES like Education, etc.

The problem(disease) with kenya economy is government spending with symptoms being high tax rates, debts, pending bills, huge budget deficits and finally cash crunch. Its a fallacy that if pending bills were cleared cash crunch would be resolved. Demand side policy only offer short term stimulus e.g payment of pending bills. The aggregate demand of kenya economy is distorted by heavy government spending that's now affecting consumption and investment.  Government is single biggest buyer but in aggregate demand government in most healthy developing countries accounts for less than 15%. The rest is private sector, 80% is what needs to be robust to ease cash crunch, create jobs and build wealth.
Basically we're unwinding from LPO driven economy to production to and consumption. The era of supplier who only supply to government or parastals is over, government cant be the sole purchaser of any business. Government paying bills so that to collect taxes amounts to changing money from one pocket to the other.

The question is proportion, Striking the right balance is what ensures that a country actually develops. Mind you there's no government economy and private sector economy. And basic economics is allocation of scarce resources. Its the allocation that determines economic growth.
Privatization would be most welcome but the government only intended to raise 10b in the current round of privatization, 10b and 4tr budget isn't even a drop in the ocean. The best option today for the current economic situation would be to shut down SOEs that're depended on government funding and to starve the government by cutting taxes, renegotiate IMF & world bank loans.