The month of July is often a month of new taxes in Kenya since it also marks the beginning of the government’s financial year. This year, several new taxes have been introduced in Kenya and as usual, the country seems to be on the futile path of attempting to tax itself to prosperity.
This is seen in the new taxes that are likely to undermine several government agendas and policies, hence making it hard for the people to be more productive, which would lead to even fewer taxes.
Energy and communication taxes
An example of this is the increase in excise duty on airtime and internet subscription from 15-20%. As Ben Roberts from Liquid Intelligent Technologies explains, data subscriptions will be subject to 20% excise duty and 16% VAT, besides other indirect taxes.
Yet, this is the government that has been shouting about supporting the young people and building the digital economy. It is the government that spends money finding ways to bridge the digital divide, and empowering Kenyans to benefit from opportunities afforded by the digital revolution.
Why then would the same government increase the cost of communication?
A second example is the introduction of 16% VAT on cooking gas. This pushes the cost of refiling a 13 kg cooking gas cylinder to KShs 2600. The new tax will make it harder for poor people to switch from biomass to cooking gas, something that the government has been trying to promote through the Gas Yetu project. The government wanted to enhance LPG penetration from approximately 10% to 70%. This project would also help combat deforestation, reduce respiratory diseases, and uplift the quality of life for many people.
Why then would the government slap a new tax on LPG and shoot itself in the foot?
The answer to these is that Kenya has been and is still living beyond its means – mostly through corruption. The time to pay for the past economic sins has come.
Borrowing, stealing, and paying
In the current financial year, Kenya plans to borrow about KShs 2.5 billion every day, and will spend more than 1.5 billion every day in paying interest on existing loans. This is because Kenya is on a debt treadmill that cannot stop on a dime.
"Kenya has been and is still living beyond its means – mostly through corruption. The time to pay for the past economic sins has come." - Jacob Mugendi (Tweet this | Share on WhatsApp)
But why so much borrowing?
For corruption purposes.
That Kenya is a corrupt country and a lot of money is lost through corruption is not a secret. President Uhuru Kenyatta admitted that the Government of Kenya loses KShs 2 billion every day to corruption, which is more than 25% of the government budget. It is like we borrow to steal, and forget that a time to pay will come. Unfortunately, the citizenry is not able to relate the poor economic policies by the government, the culture of kickbacks, and policy corruption with the taxes that have to come to pay for these ills.
This is why the government seems to have low moral standards, because while it can talk about so many flowery policies, the only thing that matters today is money and it will do almost anything to get the money, including taxing what it wants to subsidize.
A government whose middle name is corruption should never be allowed to borrow money. Borrowing is equal to stealing from the future, and for the past stealing that we have entertained, that future has come. It is now time to pay and there is no money to pay because there has been no corresponding increase in income from money that was borrowed and stolen.
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