We must all pay tax, income source notwithstanding

Thursday, January 16th, 2020 00:00 |
E-commerce. Photo/File

There has been disquiet over the move by Kenya Revenue Authority (KRA) to re-introduction both the turnover (ToT) and presumptive tax , which small businesses feel is punitive.

 My younger rebellious self would have advocated for them not to pay the taxes. But not today.

Everyone needs to pay taxes, whether small-scale traders, established business or employed.

If an employed person who earns as little as Sh12,250 a month pays a 10 per cent tax from their pay, why shouldn’t an enterprise that possibly makes more, pay their 3 per cent turnover tax?

Before you lynch me, did you know that ToT is not a new tax? It was introduced in 2007, and was meant to simplify tax compliance for small businesses.

Good news is, the turnover tax can be used to offset presumptive tax. This sounds more than fair. 

Moreover, if one feels that the 3 per cent  tax on each month’s sales is too much, they can write to the commissioner and choose to pay income tax instead, which is 30 per cent of the annual profits. 

While many argue that the government will tax small and medium businesses out of business and that they are doing nothing to help grow industries, the perception is faulty and a gross exaggeration. 

KRA headquarters. Photo/File

Why is no one commending the government for offering tax relief to plastic recycling companies for the first five years since commencement? They are also only required to pay 15 per cent corporation tax instead of 30 per cent. 

The disputed 3 per cent  of gross sales is small enough as not to stagger a trader out of business.

How is turnover tax unfair while no one complains when someone earning Sh12,250 gets taxed at 10 per cent.

And how about artists, who pay 5 per cent withholding tax in spite of the fact that their income is irregular too?

Some small scale traders turn over millions in profits despite their seemingly humble addresses. 

As we all engage in debate about turnover tax, which does not affect most of us anyway, there are more pressing issues that we should be worried about.

The housing levy, which is pending court judgment and the fuel tax. We conveniently forgot that the 16 per cent VAT on fuel and petroleum products, double what we pay today, kicked in last year on September 1, but after great public uproar was suspended till September this year.

In the meantime, the economy is shrinking, and our taxes, which we are none too happy to pay, are about to fund a referendum based on a document that most taxpayers have not even read. 

The fact that the country’s debt ceiling was raised does not exactly inspire confidence that our taxes are being spent well.

But we all need to pay for all the public goods we enjoy; the good or bad roads, the security or lack thereof and the SGR debt. 

We are in this together. We should all pay taxes, then worry about how it is being spent after we have all paid.

Our uproar against misuse of our hard-earned money will be more collective and harmonious as we shall all be in equal pain.

The employed cannot carry this country on their backs alone, just because they are easily nettable. AS KRA puts it, tulipe ushuru tujitegemee. —The writer comments on social issues

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