Opinion and Analysis
Kenyans should embrace culture of paying taxes
Posted Tuesday, June 26 2012 at 19:30
Other clean-ups announced by the minister such as taxing non-charity profits made by churches and NGOs will bring equity in taxation.
The proliferation of churches has opened the way for a money spinning unregulated business.
This is evident from the lavish lifestyles of most pastors. Church profits that are not ploughed back into charity are by all definitions taxable income. New rules should be issued on how non-charity business incomes from this sector will be regulated.
As we transform informal businesses into formal registered small and micro enterprises, we create a platform for collection of income tax.
As we congregate rural farmers into formal productive and profitable markets (fish farming, nuts, bee keeping, etc) we create opportunities for expanding the tax base.
That is why the government should continue funding economic growth through SMEs, rural enterprises, and Saccos.
Tax revenue should grow in tandem with the country’s GDP. For this reason, KRA needs to raise capacity to effectively collect all due taxes.
During the Budget speech, Mr Githae announced two significant policy contradictions.
First, he reduced taxes on exported raw hides and skins which weakens the stated government policy of protecting the nascent local leather industry through value addition.
The government, following a devastating drought a few years ago, resolved to support the livestock sector by funding the establishment of abattoirs and to promote the local leather industry through the Leather Development Council.
The unexplained change of policy is confusing and an indication of haphazard planning.
Secondly, the government has for some time supported a policy to penalise second-hand clothes imports through high taxation to support revival of the cotton sector and the local textile industry.
The Agriculture ministry has been working hard to re-vive the cotton sector.
Changing this policy midstream is a sign of absence of coordination among various government units.