The tax debate is headed to the august House. This time it is not on whether Members of Parliament should be paying tax or not, neither is it about if the Treasury is unduly holding on to refunds of investors.
The impending contest is also not about which company is evading paying to Caesar what belongs to Caesar and such endless clatter.
The debate is on whether the Treasury should be allowed to levy a 16 per cent Value Added Tax on some basic essential commodities.
The tax debate is about what will affect the ordinary and the extra-ordinary Kenyans for ages to come, in some cases with a potential for social conflict.
The VAT Bill will also see zero-rated goods become taxable at 16 per cent rate. The goods that stand to be affected include milk and cream (except unprocessed milk), maize and wheat flour, bread, infant formula, mosquito nets, computer software, sanitary towels and tampons, medical dressings and plasters, writing or drawing chalk, newspapers, journals and periodicals, exercise books and printed books and cinematographic cameras and projectors.
Other currently zero-rated services which will become taxable at 16 per cent include electrical energy to domestic households, water drilling services, and services to film producers.
Only kerosene and jet fuel will attract no tax.
As such, it is an issue that should be handled sanely and thoroughly thought through.
What is puzzling, however, is that even from the onset, critical issues that should be used as guiding points to sane deliberation have already been thrown off the window ledge by legislators and lobby groups.
It now seems to be a game of cheap and populist politics with politicians and lobby groups alike in a blanket opposition to the proposal.
So far, none of the politicians and lobby groups who have voiced their opinions on the new tax regime have looked at why the proposal to overhaul the tax regime was made in the first place.
None has also stated the options available or the compromise in the event of the new laws not passing through.
Favoring the rich?
As it stands, it appears that the key contention is driven by the fact that the clause to subject commodities such as milk, bread, maize flour and sanitary towels to value added tax without prior approval is due to the fact that it is a recommendation from the International Monetary Fund.
This is cheap.
The ensuing debacle therefore brings on the need to look at the critical issues that the led to the tax reforms.
Most tax experts agree that Kenya had reached the point to re-examine at its tax laws.
A growing wage bill, stalling revenue from tax and the general feeling that the current taxation system was skewed in favour of the rich led to the reviews proposed.
To overcome the challenges of a growing budget, it was proposed that the tax regime be overhauled in favour of a more uniform one.
After months of deliberations among interested parties, including politicians and lobby groups, a proposal has been made.
In the VAT Bill, the costs of basic essentials are bound to go up.
The argument here is while the Government has time and again zero-rated essential commodities when the prices threatened to get out of hand, such measures have failed to reach the end consumers.
Why not, seems to be the thinking of the tax experts, increase revenue to the Government then put in place a proper system that ensures that all benefit from the increased revenue collections.
Either outcome should be subject matter of the Parliamentary debate.
Other changes that should form part of the debate is a proposal by investors to have VAT tax remissions to stimulate investments.
The new VAT Bill has no such provision and instead has only two options – either a service or a good is zero-rated or it is attracting a 16 per cent tax. These are some of the key points that should form the debate, not empty rhetoric.
