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Title : Why Kenyans should expect to pay more taxes

Why Kenyans should expect to pay more taxes

Article business, Business Daily Kenya: 

The next financial year’s budget is big. According to Treasury figures, the Government of Kenya will run a budget of Sh2.62 trillion.

This is no small expenditure especially for an economy such as Kenya seeking to achieve double-digit growth. We have about five weeks to know how the Cabinet Secretary for the National Treasury Henry Rotich plans to raise the money.

But that does not stop us from guessing where it will come from since government has very specific sources of income. Let’s look at some of the possibilities.

First, it’s a given that taxes will go up. The government runs myriad tax schemes that it is likely to tweak to get more money. Value Added Tax (VAT) has been left untouched for quite some time now and it will be tempting for the government to raise it in line with other East Africa countries at 18 per cent.

Given that the East African Community is moving first towards economic integration, the government can use this perfectly to justify a rise in VAT to avoid a public backlash.

VAT would be the surest way to raise the money from a single tax band, but increasing the prices of goods and services barely two months to an election will be hard decision to make.

Well, as usual it makes great pleasure to tax the rich, or rather people who choose to spend on luxury. That’s where so-called sin tax comes in.

The government should go for smokers, drinkers and buyers of expensive cars and other imported luxury goods that are always putting pressure on the shilling. To this group, gaming companies should be added. An easy target there for the CS.

There are signs towards this already as the Betting Licensing and Controlling Board (BCLB) has proposed new levies targeting gaming and lotteries in addition to the existing taxes such as income tax and withholding tax.

Despite efforts to put in place more taxes without enhancing efficiency at the collection end won’t yield much. It will keep pushing the complaint. So, whatever taxes Rotich chooses, let them be followed by a water-tight collection strategy. The writer is the managing editor of Business Today (http://bit.ly/1ZsCdpA). Email: lmulunda@businesstoday.co.ke

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