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Do just 700 000 public workers gobble up half of Kenya’s taxes, as Ruto said?

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Do just 700 000 public workers gobble up half of Kenya’s taxes, as Ruto said?

14th December 2017

By: Africa Check

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Kenya’s public wage bill is stubbornly defying government efforts to rein it in, a frustrated-sounding Kenyan deputy president William Ruto said.

This means there is little left over to spend on infrastructure, he added.

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“[Only] 700 000 of us [public servants], consume half of that money,” Ruto said, referring to the tax revenue raised by the state.

He was speaking at the launch of a report on the six-year achievements of the Salaries and Remunerations Commission in Nairobi in early December 2017. The body, established by the 2010 constitution, adjudicates public pay in Kenya.

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In a country with a population of more than 40 million people, do the deputy president’s startling numbers stack up? We checked.

How many workers does the Kenyan public service have?

Africa Check contacted Ruto’s office for the source of his numbers. His spokesperson David Mugonyi promised to provide information, but is yet to do so. (Note: We will update this report should he respond.)

In his speech, Ruto variously put the number of public workers at “700 000”, “less than 10% of the population” and “2%”, saying that they took up 52% of the money generated by the Kenya taxpayer.

The salaries commission’s newly-released report does not state the number of employees in the public service. Chairperson Sarah Serem instead referred us to the Public Service Commission of Kenya, which hires public workers. We have contacted the hiring agency.

The 2017 Economic Survey by the Kenya National Bureau of Statistics gave the same figure of 737 100 employees as having been paid from public funds in the 2016 calendar year. This was an increase of 2.6% from 2015 when they numbered 718 400. In 2012 this number was 662 100, or nearly 10 times the independence figure of 63 000 employees, according to the pay agency.

Ruto’s figure, while understated, falls within this ballpark.

How much tax money did the country raise?

In the 2016/2017 financial year, Kenya’s treasury raised KSh1.306-trillion in revenues. This consisted of KS1.253-trillion from taxes (96% of the total) and KSh52.8-billion from non-tax sources, such as fines and money that government institutions receive and are allowed to keep to meet costs.

Who pays taxes in Kenya?

Deputy President William Ruto in his speech said there were 40 million Kenyan taxpayers.

According to the Kenya Revenue Authority, the state agency that collects taxes, 8.1-million taxpayers are registered in its Personal Identification Number (PIN) database. Of these, 2.9-million were active taxpayers, the agency said in February 2017.

The 2017 Economic Survey counts 2.7-million people as having been in formal (or registered) employment in 2016. A further 13.3-million people were in informal employment, making up 83.1% of the 16-million people captured as being employed that year.

Outside of income tax, other taxes include Value Added Tax (VAT) of 16% which is charged on consumer spending in Kenya, according to the revenue agency. 

Kwame Owino, the chief executive officer of think-tank Institute of Economic Affairs – Kenya told Africa Check it is not possible to know exactly how many Kenyans pay consumption taxes, such as VAT and excise duty.

“Although retailers must use Electronic Tax Register machines as required by the government, these machines can only tell you how many transactions have been carried out, but not who did them,” he said.

Kenyan law is categorical that children who have not attained the age of 13 years may not be employed for any reason. At least 13.6-million children are 9 years and under, according to 2017 population estimates provided to Africa Check by the Kenya National Bureau of Statistics. 

In the same financial year, the public wage bill was KSh676-billion, according to the December 2017 report Ruto launched.

This was an 8% increase from the KSh627-billion paid to public service workers in 2015/16 and translates to 54% of the income from taxation. In 2012/13 the wage bill was at KSh465-billion, or a third less.

This proportion largely supports Ruto’s statement that half of tax revenue is paid as salaries.

Conclusion: Salaries take up at least half of Kenya’s tax collection

While highlighting the drain on Kenya’s resources by a high public wage bill, deputy president William Ruto said 700 000 workers cost half of the money raised from taxation.

Data from the Economic Survey 2017 by the Kenya National Bureau of Statistics shows that 737 100 employees were paid out of the public purse during the 2016 calendar year 

Kenya further raised KSh1.306-trillion in revenues during the 2016/17 financial year. Of these KS1.253-trillion was from taxes and KSh52.8-billion from non-tax sources.

In its most recent report of December 2017, the Salaries and Remuneration Commission said that the public wage bill during the 2016/17 financial year was KSh676-billion. This was 54% of the money raised from taxation.

We thus rate Ruto’s claims as mostly correct.

Researched by Vincent Ng'ethe. This report was written by Africa Check, a non-partisan fact-checking organisation. View the original piece on their website

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