BY JANE WACHIRA
There are two seasons in the political calendar, the tax season where your nations’ leaders rob you blind for their own amusements and unending sloth, and the election season, a shameful time where your nations’ leaders offer you empty promises and platitudes in exchange for your votes and your hard earned cash – Sally Langston, Scandal US
Taxpayer’s money is a song that has been sung for days unending in our country. Not as praise for the good use taxpayers’ money has been put into but because of the misuse and all the illegal activities it has been used to fund. Recently, under the hash tag Gender Bill, a Kenyan tweeted this “for the sake of taxpayers’ money, if there is still some left – Tafadhali tusipitishe hii#GenderBill”. The eminent citizen did not support the bill not because she did not agree with its good intentions but because it would mean higher taxes.
Due to the recent heavy rains a six-storey building collapsed in Nairobi, reasons leading to its collapse included negligence by authorities who authorized its construction. My focus today, is not on the tragic collapse of the building but the El Niño billions. Last year when the meteorological department issued a warning of the onset of El Niño, billions of shillings were dispatched for relocation of people to higher ground, and in the event floods affected them ensure they were indemnified. What Kenyans witnessed were people displaced with nowhere to go yet funding for such a situation had been provided.
A tax is a financial charge imposed upon a taxpayer who may be an individual or legal entity by a state to fund various public expenditures. A failure to pay, evasion of or resistance to taxation is usually punishable by law. Types of taxes in Kenya include; Pay as You Earn (P.A.Y.E), which is a method of collecting tax from individuals in gainful employment. Corporation tax is a form of income tax that is levied on companies.
Withholding taxes are deducted from the following sources of income: interest, dividends, royalties, management or professional fees, commissions, pension, appearance or performance fees for entertainment. Advance tax is applicable to public service vehicles, it is not a final tax but a tax partly paid in advance before a public service or commercial vehicle is registered or licensed.
Indirect taxes are indirect in the sense that the prices of goods may be inclusive of tax so that in paying for goods, the taxpayer also pays for the tax e.g. V.A.T (value added tax). Excise tax is applied selectively on particular goods and services. It may be applied to production sale or to imported goods. It is paid directly by the manufacturers, but the tax burden is passed to the consumers through an increase in prices.
Kenya Revenue authority (KRA) is charged with collecting revenue on behalf of the government. The National Tax payers Association (NTA) helps citizens make the connection between the taxes they pay and the quality of services they receive.
The government provides a variety of services to their citizens, including education, health care, water, security and roads. Through paying taxes we do not receive a direct and immediate service. One person cannot afford to fully pay for a service they use thus it is the responsibility of governments to collect taxes in order to fund public goods and services for the benefit of citizens. A fair system of taxation constitutes fair allocation of the tax burden, taxes based on wealth, income and ability to pay on economic activity.
Tax concepts and principles include; adequacy, a tax system is said to be adequate if it raises enough funds to pay for public services, more so in a sustainable manner. The tax system must contain simple rules for citizens to understand and at the same time ensure the cost of tax collection and administration is not higher than the actual tax raised. It must be efficient and must adhere to the tenets of equity.
In 2005 Libya’s central government took in revenues of approximately $25.3 billion and had expenditures of $15.4 billion. Revenues minus expenditures totaled approximately $9.8 billion. During the Gadaffi regime some of the benefits that citizens enjoyed included free electricity; loans were given at zero interest rates, as banks in Libya were state owned. Having a home in Libya was considered a human right, education and medical treatments were free. Where Libyans could not find the education or medical facilities, government funded them to seek the same abroad. This was not only paid for but they also got $2300 monthly as accommodation and car allowance.
In Kenya, people have to organize fundraisers to fund medical trips while they have been contributing to the National hospital insurance fund like their life depended on it, which does, ironically. All this has, however, changed in Lybia since the fall of the Gadaffi regime.
In Finland the taxation of an individual’s income is progressive i.e. the higher the income, the higher the rate of tax payable. In 2014 the income tax rate for an individual was between 6.5% -31.75%. Finland, Sweden and Denmark have adopted the Nordic model also called Nordic Social Democracy, which couples economic and social policies. It includes a combination of free market capitalism with a comprehensive welfare state and collective bargaining at the national level. It is mainly funded through taxation. It gives rise to a society that enjoys a host of top quality services including free education and free health care as well as guaranteed pension payment for retirees. These benefits are funded by taxpayers and administered by the government for the benefit of all citizens. The citizens have a high degree of trust in their government and address societal challenges through democratic processes. The challenge with adopting this model locally is that the Kenyan government cannot be trusted!
In Sweden there’s is no need for medical insurance or to save up for education as all that is included in ones taxes. Private schools operate under the same conditions as public schools; a school gets its funding depending on the number of students. In Kenya public schools are in a desolate nature, the classes are dilapidated and have degenerated over the years, some do not even have solid structures, and the quality of education is quite poor. Parents are taxed for free primary education only to end up paying hefty school fees in private schools.
Taxation is the key source of revenue that the government uses to provide public services to its citizenry. In Kenya the issue in dispute is on how taxpayers’ money is being put into use. Taxes in Kenya have been used and abused, from repaying foreign debts to paying ghost workers, funding helicopter rides, to grabbing land, paying sitting allowances to parliamentarians. All we are sure of is that taxpayers’ money is being used for all but the right purposes.
During the climate summit COP 21 2015, Kenya sent a team of at least 41 delegates to represent the country while Tanzania’s, President Magufuli sent a team of two. With such a huge representation at the climate talks you would expect the aftermath to be at the very least spotless streets, but is this the case? The government is always looking for loopholes to get more taxes, recently they hiked excise duty on imported second hand cars to about Sh200, 000 while adjusting prices of fruit juice, cigarettes, beer, bottled drinking water, yes even drinking water, a basic need.
You would expect, like in the Nordic model, high taxes would mean better services; this however is not the case.
Gadaffi gave his country a wide array of benefits that made their life easier socially and economically. His was a case of benevolent hegemony, the difference with democratic governments is by far a contrast; in Kenya’s case neither the democratic nor the dictatorial governments have eased the financial burden on citizens.
Kwame Owino of Institute of Economic Affairs says our tax system is far too complicated for the levels of income that we have. It’s far too complicated for people to actually adhere to all those taxes. I say ours is not complicated because citizens do not understand how the tax system works; it is complicated because we fail to comprehend where our taxes go.
As citizens wait in bated breath for the budget reading in June, fingers stay crossed that the government will at least lower the cost of basic items such as flour, milk, bread, water and the like and at the same time hope that no more excise duty, VAT or tax will be added on the already high priced items.
