Taxpayers risk losing billions as State bodies bypass tender laws
The Kenya Revenue Authority (KRA) hosts the annual taxpayers month celebrating the taxpaying public starting this week.
This comes against the backdrop of rather unpleasant reality that Kenyans are among the most taxed in Africa as KRA still struggles to meet its revenue collection objective.
The long and the short of it is that the taxman must drive dialogue that helps massage the burdened taxpayer to make them feel obliged to continue remitting taxes to meet the country’s financial obligations.
This month’s dialogue must go beyond the obvious talk on the public good, and instead focus on taxation as a form of the social contract between taxpayers and the government. This is the only way to push for accountability and prudent utilisation of revenue.
Granted, the government needs revenue but never has Kenya had so much trouble in choosing not only the level of tax rates but also the tax base amid increasing competing demands for cash.
The government must explore friendly systems to push for tax compliance systems without discouraging both taxpayers and investors. Indeed, in economies that score highly in the ease of doing business rank, investors tend to perceive both tax rates and tax administration as less of an obstacle to business.
When tax administration is perceived as unfair and unstable, however, it is likely to bring the tax system into disrepute and undermine the government’s legitimacy.
While it is prudent that efficient tax administration helps encourage businesses to be formally registered, thereby expanding the tax base, it must not be a stumbling block to business.
To spur the economy, it is imperative that the government puts in place mechanisms to make a national duty, rather than a burden.
KRA must ensure it utilises arbitration more often to encourage softer ways to enforce tax collection as opposed to drastic means that may have a negative effect on targeted businesses.
When KRA clamps down companies fastidiously, it literally bites the arm that feeds it. When companies close shop and render their workers jobless, it means lesser taxes for the State.
Integrity remains integral in tax collection and utilisation. People entrusted with the mandate to collect taxes should pass the integrity and accountability test.
Cases abound where KRA officials are hounded to the court of graft-related cases. Such cases leave a bitter taste in the taxpayer’s mouth.