Policy, administrative pillars of an effective tax system
It is no longer matter of conjecture that the country is going through lean economic times—straddled between declining revenue collection and worrying national debt.
The situation is not only compounded by reduced productivity, especially in key sectors such as agriculture and manufacturing, but endemic wastage and pilfering of public resources.
This is ironical for a country that holds so much promise and has for long been the hub of the regional economy and inter-connectivity.
The situation is largely self-inflected; policy makers either dropped the ball or took for granted factors that gave us that place of pride in the region and failed to see when neighbours such Uganda, and Rwanda that always depended on Kenya for goods and other services started rising to their feet and became real competitors.
Consequently, the country is attracting fewer foreign investors while others that were domiciled here have closed shop and relocated elsewhere.
As result, the Kenya Revenue Authority (KRA), which with all due respect has been at its most inefficient in collecting revenue, is now running around and raiding firms, looking for lost and delayed revenue to meet Treasury’s demand for more money for government services.
In its desperation, it has taken steps, though within its mandate, that have unsettled some companies.
For instance, tax disputes with some firms in the alcohol sector and betting firms could easily result in shutdowns and loss of jobs at a time of high unemployment.
If not handled with sobriety, the approach to tax rows could easily send the wrong signal to potential investors that may opt to find a home in neighbouring countries keen to tap into uncertainty created by our flaws.
The government must also invest more in farmers to enhance agricultural output to ensure food security and create a base for value addition of the export crops such as tea and coffee.
This is where the greatest economic promise lies. It also needs to protect resources by enhancing the fight against graft.
This is why last week’s austerity measures announced by the Treasury to curb wastage in government was a welcome move. But this must be buttressed by prudent use of meagre resources.
It is only logical that during tough economic times, everyone—not just the common people—must tighten their belts.