Ladies and Gentlemen,

I am happy to join you for this year’s Taxpayers’ Day Celebration. I thank all those patriotic Kenyans who have continued to pay their taxes. It is through these taxes that we have managed to achieve the level of development we are enjoying today.

To those esteemed taxpayers who will be receiving various awards today, we celebrate you and urge you to continue working hard.

Ladies and Gentlemen,

It is gratifying that since 2009, our economy has continued on a recovery path. Last year, the economy expanded by 5.6 per cent up from 2.6 per cent in 2009. It continued in this growth trajectory in the first and quarter of 2011, during which our real GDP expanded by 4.8 per cent and 4.1 per cent, respectively. This growth was broad-based and driven by key sectors of the economy, including agriculture, trade, construction and financial services, among others.

In spite of this growth, we recognize that there are key challenges that need to be addressed. In particular, we need to effectively tackle the rising inflation, the weakening of the Shilling and high interest rates. In this regard, I note that the measures we have taken so far are beginning to bear fruit. We must not relent until we get to an equilibrium exchange rate that is favourable to our importers, exporters and the ordinary consumer.

Ladies and Gentlemen,

We are also taking additional policy measures and structural reforms in order to sustain and accelerate the growth momentum and thereby address unemployment, poverty and inequality. As part of these measures, the Government is deepening tax reforms and modernization in order to make our tax system simpler, easier to comply with and, more importantly, efficient in facilitating business growth.

With respect to expenditure, we have strived to ensure efficiency in the use of resources raised through taxation. We are also allocating these resources in accordance with our priorities as set out in VISION TWENTY THIRTY and the Constitution. These priority areas include accelerating the rehabilitation and expansion of key infrastructure; investment in basic social amenities; expanding access to basic education and healthcare services; and promoting a competitive environment. This includes the ease of doing business to encourage private sector growth and employment creation.

Ladies and Gentlemen,

With respect to tax administration, we note progress the Kenya Revenue Authority has achieved in reforming our tax administration under its Tax Modernization Program. As a result of these reforms and improvement in tax compliance, tax collections have increased several folds since 2003, thereby enabling the government to fund almost 90 per cent of its programs using domestic resources.

More needs to be done, however, to further simplify and modernize the tax system, expand the tax base and improve compliance. For this reason, the Government is undertaking a comprehensive review of the tax system. More specifically, the Government has finalized the review of the VAT Act, to address some of the challenges taxpayers have experienced in the past. I am confident that when enacted, the new law will facilitate compliance and promote growth of business in our country.

In conclusion, ladies and gentlemen, I would like to touch on the issue of governance. Although the Kenya Revenue Authority has put in place mechanisms to fight corruption, we must not relent in fighting this vice. We must especially deal with those tax officers who collude with businessmen to evade tax. Such people have no business working in our tax collection system and should be ruthlessly dealt with. Let us all demonstrate patriotism by paying taxes and reporting those who defraud the State and Kenyan people by evading paying tax. I look forward to the cooperation of the Kenyan people in this regard.

Finally, I once again thank all taxpayers as well as the KRA Board, Management and Staff for the continued contribution to the development of our great Nation.

Thank you and God bless you all.