Inflicting pain on the citizens through higher taxes and layoffs was a playbook popular in the Global South in the late '80s and early '90s. It was the primary thinking of an economic viewpoint christened the Washington Consensus. This viewpoint came with a one-size-fits-all prescription for countries in South America Asia and Africa that were saddled with debt. That programme of intervention by the IMF, the World Bank and the US Department of Treasury was largely called the Structural Adjustment.
The only other time regimes have imposed higher taxes arbitrarily is when you are dealing with autocratic ones that care very little about the plight of the citizens. All democratic governments from the advent of democracy in Athens to present-day sub-Saharan countries are at all times concerned with keeping taxes low.
In the past couple of days, Kenyans have engaged in an intense conversation over the Finance Bill 2024. The consensus has been, "We must join hands to stop the decline that has eroded the soul of the nation for so long". The '20s cannot be the decade of growing anxieties and declining confidence. For we started it with a bad pandemic, then went into an election and the all too obvious motions that an election year comes with, and now a tax code that is threatening to drive a wedge between the people and their government.
I recently took up an assignment on public policy advisory around the Finance Bill 2024, and its intended consequences if passed as it is. So when the lawyers in the room retreated to comb the Bill line by line, our statisticians were engaged in a survey on the optimism of Kenyans against the backdrop of the looming higher taxes. When both teams reconvened the verdict was scathing. The lawyers were convinced that unless the drafters themselves step forward to explain the finance bill, the incoherence that was already ongoing in the media when elected members of the administration attempted to explain the Bill would deepen, consequently estranging the masses.
The statistics department told us that the Bill had managed to unite the middle class and the poor in its unpopularity with disapproval ratings hitting as high as 89 per cent but since other political pronouncements had been made such as cutting the Executive’s recurrent expenditure by 30 per cent, they had to subject the survey to further tracking to see if there were any shifts.
Households feel very helpless in the face of the mounting cost of living as businesses battle the indignity of taxes that are steadily obliterating rewards for hard work and enterprise. Without careful re-engineering, the new taxes are certainly killing the risk-takers with the vision to create the opportunities of tomorrow.
It was a great paradox when the Treasury CS Njuguna Ndung'u said at the launch of the Sessional paper No1 of 2023 that youths present the country with great opportunities yet his most recent work - the finance bill - has the potential of robbing the same youths of every dignity imaginable. The dignity of work is threatened. The dignity of ingenuity and thrift is precariously hanging on the balance. The dignity of stepping up for loved ones is also threatened as we are likely to tax even the money we transfer to our aging parents and loved ones.
I believe a key to the decade of vigorous economic activity that will help us fling open the gates of prosperity and security for all is domiciled in a tax code that does not punish consumption of household essentials like bread, cooking oil, milk and such. If you kill the spirit of the people by giving them a higher consumer price index through a taxation strategy that appears predicated on everything but compassion, empathy and prudence then "The new poor will soon mobilise into a force of change’’ as Eric Hoffer warns in his book 'True Believers'.
To all those feeling disillusioned, be ye still for there is nothing to fear except fear itself. We are the sovereigns. No force can overcome the power of a united people.
Mr Kidi is the Convener of the Inter-Parties Youth Forum. [email protected]
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