NAIROBI (Xinhua) --
Economic experts on Tuesday urged Kenya to reduce the size of
government in order to lower tax burden.
"We urge Kenya
to reduce the size of government in order to reduce taxation and
hence free up funds from the private sector to make investments
in the productive sector," Kwame Owino, CEO of Institute of
Economic Affairs (IEA), told a business forum here.
According to Owino, Kenyan public expenditure is equivalent
to 30 percent of its gross domestic product (GDP), however the
ideal size of public expenditure for Kenya is about one third of
its current spending.
He said that raising taxes takes away more money from the
public and constrains the ability of market forces to determine
efficient allocation of resources.
"A lot of public expenditure on government projects or
subsidies either has no good returns on investments or leads to
market distortion which reduces the efficiency of the economy,"
He added that the government has a huge budget deficit that
is financed through borrowing from commercial banks.
"This domestic borrowing has a negative effect on the economy
because it reduces the amount of credit available to the private
sector to make investments," he said.
He suggested Kenya reduce the size of government through
privatization of state owned corporations involved in commercial
The conference is focused on the business opportunities
related to Kenyan President Uhuru Kenyatta’s developing agenda
on food security, manufacturing, universal healthcare and