The last two weeks' conversations in work and social settings have hinged on the frightening speed with which the cost of living in our sun-kissed country is escalating.
Moreso because a significant driver of that escalation is coming from government policy. Two major issues straddled the airwaves last week.
First was the luxury hotel banquet room declaration by the Cabinet Secretary for Industry and Trade that he had asked his principal secretary to draft a law within the next 30 days making it mandatory for any registered business to become a member of the Kenya National Chamber of Commerce and Industry (KNCCI).
There are approximately 1.5 million registered businesses in Kenya ranging from small enterprises to large multinationals.
Out of these, only about 240,000 are registered for value-added tax (VAT) under the Kenya Revenue Authority.
To be registered for VAT, a business should have a turnover of Sh5 million or more per annum.
Sixteen percent of the registered businesses have a turnover of Sh5 million, assuming (perhaps quite optimistically) that the 16 percent is fully representative of all possible VAT compliant entities.
The minimum annual membership fee for KNCCI is Sh50,000 in order to hang the cherished membership certificate at your business premises in a gold-plated gilt frame.
I’m struggling with how my small consultancy business will benefit from this association, but papa knows best and I must submit, as a God-fearing and law-abiding citizen to papa’s demands.
The Bill of Rights in the Kenyan Constitution elegantly provides for the whimsical nature of paternalistic directives from those who supposedly know what’s better for us ignorant natives.
Article 36 provides for freedom of association and states that every person has the right to freedom of association, which includes the right to form, join or participate in the activities of an association of any kind.
In fact, the article expressly states further that a person shall not be compelled to join an association of any kind.
The only mandatory payments businesses should be making are those legislated under licensing or taxation laws.
After all a tax is defined as a compulsory contribution to State revenue, levied by the government on workers’ income and business profits, or added to the cost of some goods, services or transactions.
Which definition makes a great segue to the second burning issue on Kenyan minds. The housing levy. The levy that is not a tax. Quack. It is a savings mechanism. Quack.
It helps those who cannot afford housing to get housing by compulsorily deducting money from every single income taxpaying employee that may or may not be interested in ever owning an urban home. Quack.
With a matching contribution compulsorily required from the employer. Quack. Is it a compulsory contribution to State revenue? Yes.
Is it levied by the government on worker’s incomes? Yes. If it walks like a duck and talks like a duck, well, it must be a tax collecting duck.
And then last Tuesday we were treated to a 90-minute press conference by the Principal Secretary in charge of housing.
In between swatting off glasses of water from the podium in the course of his animated explanations and a passionate proclamation to us tax-weary natives that nyinyi hamuelewi hii kitu (you guys don’t understand anything) as he frequently dabbed his face with a handkerchief in palpable excitement, we were told that we will get 100 percent guaranteed return on our “savings” because we would have access to our employer’s contribution upon our retirement or death, whichever came first.
Other than these post mortem benefits to the individual, it is still not quite clear what benefits there are for the employer who, while munching on the tea break cashewnuts served at the soon to be mandatory annual KNCCI retreat, might be educated on those benefits during the member education session number five.
As Juliet poetically gushed to Romeo in the famous Shakespearean play, “A rose by any other name would smell just as sweet.” A tax, by any other name, smells just as bad. Good luck my fellow native Kenyans. It’s a full-time job being us.
