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Uhuru: Govt won't raise taxes to reduce wage bill

10 March 2014, 13:46 Nechesa Chemoi

Nairobi - President Uhuru Kenyatta Monday said the government will not raise taxes to tackle the problem of rising wage bill in the country.

Speaking during the launch of the national debate on public wage sustainability in Nairobi, the president said the move would have a negative impact on businesses and youth employment.

He said the government was convinced the recent growth in public sector wage bill was unsustainable and unacceptable and was trying out all means possible to contain the situation.

“In the current financial year, for example, we estimate that total remuneration to the public service will account for 55% of our tax revenue, and 13% of the national cake or what economists call gross domestic income.  If we maintain this trend we would be dedicating an ever larger share of the wealth we produce as a country to the remuneration of public servants,” said the president, adding that it is good to pay people well but this must be done in a manner conducive to the development agenda.

He said the government had other priorities that need money, apart from paying salaries.

“We need, as an example, to develop our roads and revamp our health facilities.  The standard gauge railway, initially from Mombasa to Nairobi, must be paid for. So must we implement the South Sudan and Ethiopia Transit corridor that will open up all of the Northern Kenya to new investment and economic opportunities.  We must also invest in the million-acre irrigation programme in Galana, in order to achieve our food security goal,” President Kenyatta said.

He said this would not be achieved if the government fails to contain the pressure on wages.

“It is time to put the monster to rest and we wish to lead by example. Only last week my deputy and I resolved to take a 20% pay cut.  We were joined by members of our cabinet as well as the Principal Secretaries, who agreed to match our effort with a 10% pay cut.  We meet here today to see what more we, all of us together, can do to carry out that effort forward,” he said.

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