Columnists

Don’t burden workforce with more taxes

times

Times Tower, the headquarters of the KRA, in Nairobi. FILE PHOTO | NMG

The Budget season has finally arrived and Kenyans are eager to see the government’s latest spending priorities, and by extension, which levers the government will pull to raise the necessary funding.

While the budgeting cycle might be as old as the hills, it’s shocking that nobody ever asks the most basic question. Will the government ever raise more revenue than it spends? Essentially, can Kenya ever rid itself of its addiction to deficit and debt and for the first time aspire to a surplus? The answer is a simple yes. But it’s a road fraught with difficulties at every corner.

Instead of the government burdening the existing workforce with extra taxes and slashing the much needed public services, it’s time to talk about those sectors of our economy that are not paying their fair share of taxes – the turns not taken, the opportunities foregone: the taxes which could have spared us every turn of the screw. No sector of the economy has enjoyed an easier ride than the real estate sector. Land in Nairobi was last valued in 1980 and current land rates had been levied at 17 per cent before being increased to 34 per cent.

In areas such as the Central Business District, it is hard to fathom the land appreciation that has taken place in the last 35 years and subsequently the amount of potential tax revenue that the Nairobi County could be earning. Making it even worse is the fact that Nairobi’s last valuation roll only covers less than a quarter of the total properties. It is encouraging to note that City Hall has begun reviewing its valuation roll, with support from the World Bank. The counties would also greatly benefit from this initiative, as they would be able to finally raise additional income to supplement what they receive from the national government.

The Kenya Revenue Authority, and not the IMF, needs to be at the heart of Kenya’s growth strategy. Through innovative technologies and capacity building they can bring transparency and equity to public revenue collection. It is the surest way of guaranteeing freedom and prosperity.