"Things fall apart; the centre cannot hold" is an excerpt from the epigraph in Chinua Achebe's classic novel, 'Things Fall Apart'.
It aptly depicts the current scenario in Kenya. The country is facing myriad challenges, including high cost of living, inflation, reduced incomes, unemployment and corruption. As a result, many Kenyans are grappling with uncertainty, making them feel like things are falling apart.
The current leadership has abandoned its campaign promises to 'hustlers' and is instead churning out disinformation and propaganda on critical issues. Ironically, it is against this backdrop that the government is forcing the Finance Bill, 2023, down our throats, completely disregarding our collective concerns. The bill proposes a raft of radical changes to our tax policy that will have far-reaching implications.
It begs the question, are we in a dictatorship or is this state capture in its rawest form? Those in power are only interested in their own agenda, totally ignoring the overall impact of the Bill on the people.
Some of the notable proposals include doubling value-added tax on petroleum products from 8 to 16 per cent, raising excise duty on mobile money transactions to 15 per cent, introducing a mandatory 3 per cent housing levy on employees that employers must match, 3 per cent turnover tax on small and medium enterprises applicable to businesses with daily sales of approximately Sh1,400 and 15 per cent withholding tax on digital earnings.
If the proposed changes come into effect, the tax burden will impede economic growth and we may end up like Greece and Venezuela. The Greek economic crisis began in 2009 and by 2010, the tax burden was over 40 per cent of GDP.
Combined with high national debt, corruption and financial mismanagement, it led to the economy shrinking by over 25 per cent by 2015. In Venezuela, the tax burden was even higher, reaching over 50 per cent of GDP in 2016. There was also widespread corruption and inefficiency that led to hyperinflation and economic collapse.
We're facing eminent economic collapse due to similar issues that we can resolve by learning from the two countries. Rather than raising taxes, the government should focus on reducing expenditure, strengthening accountability and improving incomes. We need a fair and balanced tax system.
The government seems to think that increasing taxes is the solution to financing its projects and claims to be emulating Singapore's model in building affordable housing. In fact, Singapore has a very progressive tax system that is designed to redistribute wealth and ensure that everyone has an equal opportunity to succeed. Singapore's public housing system is funded by a combination of government subsidies and private sector investment - not through additional taxes forcefully imposed on citizens.
The proposals in this Bill will likely raise the cost of living and exacerbate economic disparities. Therefore, it's crucial that the government pays attention to citizens' concerns and demonstrates a genuine commitment to incorporating their input.
-Ms.Taa is a governance and political analyst. viviennetaa@gmail.com
