Address sticky issues touching on tax regime
As the Kenya Revenue Authority yesterday held celebrations to mark the annual taxpayers’ day, it was not lost to Kenyans that the State serenaded those who paid the most tax.
It is a good thing to honour those who carry out their civic obligation to pay taxes, but there is a valid concern on the growing militancy in tax collection. While it is the duty of everyone to pay tax, making the event a bloodbath is not good for the economy. To make tax collection sustainable, the process should be amicable as opposed to approaches that have proved retrogressive and counterproductive.
The importance of compliance to tax payment cannot be gainsaid—it tames unfair competition and boosts innovation and production.
To boost revenue collection and improve perceptions towards taxation, KRA should sit with the taxpayers and work with them as partners in economic growth. This will ensure transparency.
KRA has recently been unable to meet its targets, forcing Treasury to lower ambitions in the next quarter. This is a bad sign and KRA must strike a balance.
It’s worth noting that weaponisation of tax collection could boomerang on the economy. For instance, it beats logic to shut down companies over non-compliance and render hundreds of people unemployed where a tax tribunal would have cushioned both taxpayers and KRA.
While the intention is to deter non-compliance, the taxman unfortunately finds himself biting the same hand that feeds him, and this affects inflows into the economy. This affects the government’s ability to deliver some crucial services.
As economic fortunes dwindle worldwide, tax disputes will invariably increase, they must be resolved numerically, speedily and amicably.
To win this war, KRA must target efficient, fair dispute resolution mechanisms—one of the options is mediation.
For instance, when the Treasury Cabinet secretary recently pronounced some austerity measures, the Judiciary was the worst hit, hampering effective administration of justice. This leads to frustration and backlog of cases.
Already mwananchi are bearing the brunt of the cuts, particularly with the halting of the mobile courts. The same scenario reverberates in other sectors.
While efficient collection and use of taxes will ensure economic growth is key, the answer lies in revitalising productivity, especially agriculture.