“Why won’t the Kenya Revenue Authority embrace Bitcoin as a mode of payment? Apparently, they don’t trust anything they can’t freeze.”
Many years ago when I had far less salt than black pepper as my predominant hair colour, I worked in the banking industry at a time when unsecured lending was just being introduced into consumer lending.
The pioneer bank of large-scale unsecured lending at the time was one of the current Tier 1 blue chip lenders. At the time it was a minimum requirement to have your salary received through an account at that bank.
You see, once your salary hit the account, automated and very invisible loan repayment hands would very quickly claw back the monthly principal and interest loan deductions.
Since it was innovative at the time, employers were happy to sign commitment forms that they would ensure your salary was directed to that bank for the deductions to happen.
A sort of guarantee at the time, though of course it wasn’t worded as such.
Remember, employers are human beings too and everyone was excited to have access to unsecured loans.
I have also often posited that after its 2002 market entry, unsecured lending was the single largest direct cause of the traffic bedlam that Nairobi became, as now anyone could buy a car without having to put an asset as collateral. But I digress.
In the fullness of time, this particular bank started to endure stress on its unsecured lending portfolio emanating from one specific category of employees— tutors who were employed by the Teachers Service Commission.
As it was then and still remains the case, many teachers had more deductions on their payslips than they had spare red marking pens in their pockets.
From Sacco loan repayments, union dues, depending on whether they are members of the Kenya Union of Post Primary Education Teachers or the Kenya National Union of Teachers, Higher Education Loans Board repayments, Widows and Children’s Pension Scheme ( I kid you not), among others.
The bank had to enter into specific negotiations with the teachers’ employer to remit funds directly and find a way to prioritise the bank’s loan deductions in the miasma of other deductions that were being made on the highly leveraged individuals.
The government recently announced yet another proposal to increase National Health Insurance Fund contributions for salaried workers in the form of a 2.75 percent levy on gross income.
This is in addition to deductions for National Social Security Fund, the controversial new National Housing Development Fund, pay-as-you-earn income tax, private pension fund and whatever other SDA (salary deducting acronym) can create additional pressure on the waged worker.
According to the Economic Survey 2022 published by the Kenya National Bureau of Statistics, there were 2.9 million wage workers in Kenya in 2021, of which 31.8 percent or about 923,000 were in the public sector.
The private sector accounted for 1.9 million workers or 68.2 percent of the total figure. The Economic Survey also reported that the total wage bill in this formal sector of employment was Sh2.4 trillion in 2021.
I now get why the government is simply salivating at these numbers. Skim from the top to support the bottom. After all, during the team meeting where these numbers were tabled, a bottle of champagne was excitedly produced and glasses were filled.
The convener shouted “bottom-up” and everyone chugged down their drink in the victorious realisation that there was enough room to manoeuvre around Kenyan employee payslips.
In this race to the bottom of taxing citizens into questionable prosperity, the message is manifestly clear — the salaried minority must support the unsalaried majority.
It is not enough that Kenyans suffer from “black tax”, you know that tax that Africans endure when they have to support numerous relatives with school fees, medical bills, wedding contributions, funeral expenses and what-have-you.
Our informal socialist economy is now being formalised. There is a clear and present danger of this continual increase in any tax or levy facing the salaried worker that requires a matching contribution from the employer — the cost of doing business will balloon.
For an employer, it’s a very easy decision to make — automate as much as is feasible, outsource tasks to offshore service providers where possible and just re-invent the working wheel as Covid-19 showed us to pivot.
The capacity to tax the Kenyan salaried worker has to eventually bottom out as has my capacity for any more “bottom” euphemisms. And just like cryptocurrency for the tax man, there will be nothing to freeze.
