Experts call for equitable taxation, wider net

By Luke Anami

Tax regimes that are made by governments annually should be scrutinsed by citizens to ensure the poor do not bear most burdens, Wagakuyu Wakiburi, a Tax Consultant at Tax Justice Network-Africa has said.

Further, care should be taken when formulating tax policies and laws to ensure that citizens do not evade tax.

"There is too much taxation on the same income yet there exists an underground economy that is bigger than the formalised economy that could also be brought into the tax bracket," Wakiburi said at a workshop to demystify taxation in Kenya and Tanzania.

Calling for tax to be extended to the informal sector in a structured manner, she said sound tax regimes should ensure people understand why they should be taxed for them to support the system.

"We have a situation in Kenya where any time the Government wants to increase tax, it still raids the pay slip where Kenyans are already burdened by Pay As You Earn, NHIF, NSSF, Relief and other statutory deductions. Why not scrutinise what we already have and widen the tax net as there are cases of people in the informal sector who earn more than those in the formal sectors," she says.

Tax burden

She called for an equitable tax system where each person pays according to his or her ability. A more equitable tax system will ensure that individuals with higher incomes bear a greater tax burden compared to individuals on lower incomes.

"Most of those in the formal sector are already paying taxes heavily at the expense of others who should have been in the tax bracket. Yet there are more who should be in the tax bracket and even could afford to pay more such as our legislators," Wagakuyu explained.

Further, citizens should be more vigilant and insist on those who evade tax to pay by taking legal action against such moves.

"It is illegal to refuse to pay tax. Kenya Revenue Authority should not shy away from going after tax evaders including using the law to ensure tax compliance," she explained.

Lucy Atim, Programmes Manager at Panos East Africa said care should be taken to ensure taxes are used for the purposes they were intended for.

"Each year, the East African Community partner states prepare their budgetary statements at the same time. Care must be taken by their citizens to ensure money allocated for earmarked projects to alleviate poverty is utilised prudently," Ms Atim explained.

She called for review of taxes including VAT, tax exemptions to multi-national companies among others with a view of ensuring those in the poverty ranks benefit rather than continue to be burdened.