Let Kenya be first country of flat tax on bank transaction

Everyone was supposed to be identified. Clean dirty money. Extinguish fake money. Raise the tax base. Fit public spend into revenue. Go digital government.

Sorry, that was India’s experiment, not Kenya’s. We did our usual stuff, copycat 101.

Yet, ours was supposed to be smarter, and different. Officially, 38 million of us signed up to ‘Huduma Namba’. A good guess from the census says we are 50 million people in Kenya.

Do we have serious economic policy? Nope, it’s all business, mostly private and personal. In other words, dynasties. When super-economist Paul Krugman explained to the world why a country isn’t a company, we didn’t get it. Today, I hear that Kenya is a company; not yet a country, or a nation.

We’ve been counted at least three times this year…Huduma Namba, Census and “ngiri moja” (one thousand shilling) notes. There is no feeback. This is the trouble with an incoherent, and probably selfish, policy agenda – throwing, then eating money at every single problem instead of solving people’s problems. There’s no MBA that solves this.

By example, what’s our SME agenda beyond money? We might have started with regulation, including competition policy. We could have explored our access to markets. We may have discovered how to build organisational culture. Then we might have thought about resources, beyond cash. But Kenya is about cash, not ideas.

Or we might have gone totally crazy, and read a great White Paper (World Economic Fotum/International Trade Centre) that explores why there’s no such thing as a commodity. A simple point is made. We can’t build stuff (manufacturing) but we can add value.

Back to demonetization. India did 99 percent. We apparently did a last minute 96 percent. A week ago, “analysts”, seeing 53 percent, were celebrating the dearth of “dirty money”. Social media wondered, correctly, how we got to big numbers in a day.

Yet the fact is that CBK governor Patrick Njoroge has delivered on his mandate. He didn’t promise crazy stuff, he respected the Constitution. Our question should be about cash in Kenya.

We may begin with the “fairy tale” otherwise known as the KRA strategic plan which has promised a tax take of Sh6 trillion in the next three years. Maybe it’s time to get real.

Transaction data tells me we did Sh30 trillion plus in transactions last year through our banking system. Sh29 trillion in real time and, surprise, surprise, Sh 4 trillion in mobile money.

What if our country got SERIOUS? What if we went for a painless and seamless tax collection regime beyond intelligence that follows people day and night, to that which protects Kenya?

Here’s a foolish idea. Let’s be the first ever developing country to implement a flat tax on every bank transaction. At 10 percent, that’s Sh2.9 trillion. At 15 percent, that’s a Sh4 trillion tax take. With no other taxes. Call it the “pro-poor, pro-people” path towards what the Americans call “self-reliance”

Yes, the tax experts will moan and groan. We’re fed up with elite nonsense.