Moving Away From Tax in Taxnation

Moving Away From Tax in Taxnation

Moving Away From Tax in Taxnation

2560 1768 Oliver Kagwe

I think the government should consider taking some time to catch a little bit of air. It has been very busy chasing us to pay taxes, all while introducing new ones. As you might have noticed (if you are still at the bottom of the pyramid like me), they have taxed the heck out of our lives. From food to fuel, our hustles and even our dreams. I would be surprised if you would be surprised if they introduced a 16% tax on the taxes that you already pay because hey, “In order to adequately finance the budget (a budget centred around Wanjiku), we have submitted a bill in parliament to tax taxes, and in so doing we hope to raise a few billion nonsense.”

This matter of taxes is much more serious than they make it look. Taxes aren’t just imposed, raised or lowered as if we’re running a nursery school. Taxes affect the quality of the lives of actual human beings. They affect how many of us have decent jobs and how much we earn. They influence which local and international businesses open in the country. They determine how much we pay for food, rent, school, health and transport. Taxes affect how well you enjoy enjoyment. Taxes are not a game of rock, paper, scissors! They are not just imposed, raised and lowered.

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I suggested to someone that the government is being too linear in how it is handling this tax matter. Not to imply that I have much knowledge about economics, but I think I have an idea that would be worth exploring. What if the government saw past its desperation and lowered taxes instead? Here is how I see it:

To safely sail through this tempest, GOK should re-evaluate its priorities. Instead of going big on infrastructure and pointless referendums, perhaps a much more worthwhile thing to do would be going big on production and manufacturing. It should facilitate versions of the Agrarian and Industrial revolutions in Kenya. This means the following:

a. Lowering the costs involved in setting up businesses. This way, more people will get into the activities of exchanging goods and services, ensuring supply and variety.

b. Increasing production of raw materials. Kenya has vast potential in its mining and agriculture sectors. The government should consider cleaning up the mess that exists in these areas, investing in farmers and miners by ensuring that they have decent work and resources needed to produce the best possible outputs. In my view, increasing production of raw materials will ensure that we not only have supply for ourselves, but also for trade with other countries.

c. Investing heavily on value addition. We have the capacity to cut down on a lot of things that we import (like toothpicks) because we have the capabilities to make them ourselves. The budget that was read earlier this month should have had huge allocations made towards supporting factories and innovations by Kenyans. These would take in and create a demand for the raw materials mentioned in (b) above and would give rise to many other businesses that would plug into the value system. Value addition will also produce products for local and international trade. I imagine that when this has been established, Kenya will be saving huge costs that could be transferred to other priority areas.

d. Marketing. I am not worried about private businesses – I know they can handle their marketing. I am concerned about the role of the government in finding international markets for Kenya. This is the point where the Kenya export promotion and branding agency steps in with boundless zeal. I imagine a situation where we have positioned ourselves as the tea, coffee, sisal and meat masters of the world. A situation where we are even trading in what we need with what another country needs.

Still on marketing, I would lower the tax on locally made goods just a little below imported goods. Or I would increase tax imported goods more in efforts to increase the demand for locally made goods.

In all of this, I see opportunities for a cure to what has been a chronic illness for developing countries – unemployment. I am almost certain that over 70% of jobs in this country will fall within those value systems highlighted above. More businesses means more opportunity to collect tax. The more employed people are the more they have to spend. The more they spend the more tax they pay (and this is just one way, we haven’t gone into PAYE). In some way, I am suggesting delayed gratification and economies of scale in the manner in which GOK raises its own revenue.

If you are one of those experts out there who has better grip on this topic, it would be nice of you to share your opinion in the comments section below.