Forcing tax on informal business bad policy idea

Last week, the Kenya Revenue Authority (KRA) announced that informal traders will be required to log on to its iTax platform and pay the presumptive tax before county governments can renew their business permits for next year. This means those who do not pay the tax will not have their single business permits or trading licences renewed in January.

While it may look like this move is inspired by the KRA, it is actually an initiative of the National Treasury which is facing pressure to raise more revenue to meet debt obligations in particular. But it is problematic for several reasons.