The government's new tax proposals in the Finance Bill 2023 have raised concerns about the administration's sensitivity to the plight of its citizens. The cries by wananchi and vehement opposition to the tax measures puts the government in direct conflict with the people it is meant to serve.
Among the contested levies is the increase of value-added tax on petroleum products from eight per cent to 16 per cent. Increased tax will raise the prices for consumers and with fuel being an enabler of economic activities, this will have a ripple effect on many other goods and services. The proposal takes the country back to 2018 and the acrimony that ensued in Parliament when the VAT was implemented.
The government also intends to increase the tax rate on salaries above Sh500,000 from 30 per cent to 35 per cent, further squeezing workers who are already suffering from high taxes.
In addition, Treasury proposes to introduce a three per cent levy on salaries to go towards development of affordable housing. This levy, what the government is calling a saving, is not optional even for those already living in their own houses. Shouldn't workers have a right to decide if they want a house, and where it lies among their economic and social priorities?
The tax proposals are clear evidence that the government sees salaried workers as a cash cow to be milked whenever it needs more revenue, rather than being innovative in tax collection. It is no secret that many individuals and businesses evade tax at every turn, and Kenya Revenue Authority should be more efficient in making them pay rather than increasing the burden on those already in the tax bracket.
Taxes are not popular anywhere in the world but governments need money so that they can efficiently run their countries and provide the required services. However, in laying out its revenue measures, the Kenyan government seems to have closed its eyes and ears to the situation on the ground.
Over the last few years, a persistent drought has led to high prices and left many households struggling to put food on the table. There is hardly any space left for higher taxes.
