Tax Inequity Unveiled: The Growing Divide In Kenya's Fiscal Landscape

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Africa
Business

Could the government of Kenya be setting the country at a crossroads regarding taxation? Is the government paying the price for the lack of controlled borrowing from the previous regimes? Could we see the people and the policymakers reject some of the tax measures that want to be introduced? There are more questions that need answers before such tax measures are applied. Some of the tax measures that the government seeks to introduce are a 15% withholding tax on payments on the monetization of digital content, a VAT increase on petroleum products from 8% to 16%, an increase in taxation of beauty products, 3% deduction that would go to support affordable housing. With an increase in the digital tax, we could be killing the jobs of the vast youth numbers who engage in digital creation as a form of their day-to-day income: Digital content has the potential for higher growth among the youths as we head into the future which could prove a major area for government revenue. An increase in tax by double percentages would result in a major dysfunction in the consumption arena by consumers who have had to bear the already high cost of living. The government could be crippling more consumers into the below-poverty levels instead of upscaling them from those levels. The government ought to broaden its tax base gradually, into bearable tax levels to encourage an increase in tax revenues to finance the government. The government needs to rely on data to find the impact that such tax measures would have on the economy. With the increase in black tax, the consumers are already overburdened which has seen a decline in the savings level in the country, thus leaving most of the consumers on a hand-to-mouth consumption basis.

ALMOST 2 YEARS AGO