Taxes should be set at 20 per cent

Now that the law capping interest rates is in place, Parliament should go ahead and legislate a law to bring down taxes levied on salaries, emoluments and services.

Kenyan's tax regimes are in the same league as most developed countries yet it is developing. To simplify the situation in Kenya, here's an example of a Kenyan earning an accumulative net salary of Sh 100,000.

Assuming that this person lives in Nairobi and is paying rent, school fees, electricity and is shopping in a supermarket, this is how his money is dismembered through taxes and VAT (16 per cent).

When his earnings of Sh 100,000 are taxed by 30 per cent, he is left with Sh 70,000, which is indirectly taxed through VAT, leaving him with Sh 58,000. This is then spent on goods and services that also demand taxes.

These include rent, electricity, water, school fees, beer, beverages and home as well as as personal supplies, all of which have different levies and taxes.

At the end of the day, he is left with very little for development.

This is how poverty is artificially created by the tax regime. Taxes should be reduced to 20 per cent.