VAT disaster an indictment on our leaders

The rollout of the 16 per cent VAT on petroleum products has been a disaster.

It is almost as if the entire administrative apparatus was caught by surprise, despite having years to plan for this eventuality. 

Kenyans, too, have been acting like they did not see this coming – a reminder that as a country we are still far from having a public that understands the links between politics and pocketbook issues.

Multiple people bear responsibility for this policy and fiscal disaster. Policymakers at Treasury should have communicated better and coordinated their actions with the Kenya Revenue Authority (KRA) and the association of independent distributors. Parliament ought to have been more thoughtful in envisioning the rollout of this tax increase. And President Uhuru Kenyatta, as the chief policymaker, left a lot to be desired with his cavalier attitude throughout this disaster.

The public may yet win this fight against our political elites’ parasitism and obtuseness when it comes to policymaking. The increase in the cost of fuel hit most households hard, especially in a month where many parents also have to pay school fees at the beginning of third term. The lack of clarity with regard to whether this was settled law or could be amended led distributors to (rationally) not buy expensive fuel only to be forced to lower the prices afterwards. It is my hope that this policy disaster opens our eyes to the structural issues that led us here. First, the real reason we need a tax increase is because the government has been living beyond its means. Treasury has become a madhouse with regard to borrowing, with little to show for it. The more we borrowed, the more Treasury allowed well-connected individuals to steal.

The first order solution ought to be a drastic curtailment of non-essential government expenditure, seizure of all assets acquired through stolen public funds and punishment of those that stole.

It is unconscionable for a poor household in Mukuru Kwa Njenga to be asked to pay for debts whose proceeds were stolen to finance the purchase of properties abroad. The fact that our leaders are doing this is yet another reminder of their contempt for ordinary Kenyans. The public’s anger comes from the fact that the Kenyatta administration is royally unserious about stopping the theft of public resources.

Second, we need our public institutions to become more serious about policymaking. One of the reasons for the timing of this tax was to please the International Monetary Fund. Why should we outsource our economic thinking abroad? Why should the IMF be seen to care more about our fiscal and general macro-economic stability than we do? It is high time our leaders took charge and owned up to their failures.  The buck stops with the Kenyan public. This episode is another reminder that siasa mbaya, maisha mbaya. Our politicians will only take us seriously if we show them that we care more about the number of sufurias in our kitchens than the ethnicity of our leaders.

 

-The writer is an Assistant Professor at Georgetown University.