Thursday, September 26, 2013

Tax move pretentious


The Westgate Shopping Mall, which  was attacked by terrorists on Saturday. FILE


Suba legislator John Mbadi has proposed amendments to the Finance Act that would see those earning less than Sh39,000 per month - the average national salary - exempted from
paying income tax.

Under the changes, personal tax reliefs would be abolished with people earning salaries above the average paying a uniform tax rate of 30 per cent.

This redistributive model, while motivated by the need to cushion the poor from the rising cost of living, leaves many questions begging for answers?

For one, the Constitution is clear that all Kenyans must be subjected to tax so that the burden of developing the economy is shared.

What impact would leaving the bulk of public sector workers - teachers, policemen, civil servants - from the tax net have on compliance from private sector workers?

Secondly, taxation is directly related to the delivery of services such as infrastructure, education, health, security. How would these services be funded with more people outside the tax bracket?

With public servants led by elected representatives clamouring for higher pay including through devious schemes by MPs, would they take a pay cut in line with the shrinking tax base?
A word of caution. The welfare state being advocated by some leaders could work against the very citizens it is intended to benefit.
Someone needs to explain how the shortfall in taxes would be offset, outside the refrain of sealing leakages and expanding the tax net that is.

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