Yes, let Treasury CS engage us but overtaxing Kenyans is no solution

Treasury Cabinet Secretary Njuguna Ndung'u. [Elvis Ogina, Standard]

Treasury Cabinet Secretary Njuguna Ndung'u has finally emerged, engaging publicly in pronouncing government policies and plans, and explaining the economy.

This is important whether we agree with him and the government or not. Prof Ndungu has the authority and mandate to make these pronouncements not any insensitive busybodies. Perhaps, he will listen keenly to what concerns Kenyans and engage them constructively.

Kenyans have been grappling with the incredibly high cost of living and ever-increasing prices of commodities and utilities, insecurity, dry taps, uncollected garbage, poor delivery of services, and unmaintained or inexistent roads and communications infrastructure.

Most employers in formal and informal sectors have to incur high costs of maintaining vehicles and equipment, costly private security, dig boreholes or buy water and look for alternative sources of electricity and fuel, exponentially increasing costs of production and innovation.

These costs limit the number of employees they can maintain. Added obligatory taxation to employers to match employees' taxes and statutory deductions will result in layoffs to break even and make profits.

Taxes and other levies without services, undermine the economy and make growth impossible. In addition, VAT is levied on everything today. In fact, indirect taxes and levies are more than direct ones, and now, artificial beauty products such as wigs, lashes, nails, beards, etc, are to be taxed.

The government is penalising our daily life and lifestyles. The requirement for people to pay 3 per cent of their wages to the housing levy is akin to introducing socialism.

First, not everyone wants to buy a house after 7 years, some have mortgages and others own homes.

Secondly, there are no guarantees that after the specified period the money will be given to contributors to buy a house or that the money will actually be saved and not be misused or misappropriated.

Finally, not everyone wants to own a home where they work. How does the government force one to own a home if they don't want one?

Contributions to universal healthcare make sense because it goes to building health insurance and health infrastructure that will benefit all people and future generations. There is no explanation or justification for increasing PAYE and introducing the housing levy and taxes mentioned above.

The consequence of over-taxation is one that Kenya can ill afford. First, investors will flee in droves. It, therefore, becomes cost-ineffective to have companies and manufacturing plants not making profits. In addition, employers are unable to make viable profit margins and are most likely to declare more people redundant, increasing the population of unemployed Kenyans.

Over-taxation will demoralise workers and discourage work because many will feel like they are working for their employers and not for themselves. This is because workers will barely meet their basic needs and will have nothing for saving, investment, and innovation.

In fact, the increased taxes and statutory deductions will affect the allocation of economic resources and may slow long-term economic growth. There will be no money to lend to the government for infrastructure and other public developments through bonds. Indeed, the last bond that was floated didn't succeed because those with money are either hoarding it or had no confidence enough to invest it in bonds.

Perhaps the government should consider being more facilitative and creating an enabling environment by speeding licensing and company registration processes, export and import processing, guaranteeing security, ensuring efficient and accountable services delivery, facilitating the provision of reliable and clean energy, potable water, maintaining and building roads, and communication infrastructure.

President Kibaki inherited dry coffers, he did not overtax Kenyans. His economic and infrastructural development are unmatched and he left a healthy Treasury.

The key function of public servants is to facilitate and create an enabling environment for the private and informal sectors to create wealth and bake the national cake.

Over-taxing them is inceptive for corruption and bribery because the temptations to demand kickbacks increase exponentially. They may find it difficult to resist illegally receiving a piece of the national cake just to survive or even joining in the baking, which is not their job.