The Budget season has finally arrived
and Kenyans are eager to see the government’s latest spending
priorities, and by extension, which levers the government will pull to
raise the necessary funding.
While the budgeting cycle
might be as old as the hills, it’s shocking that nobody ever asks the
most basic question. Will the government ever raise more revenue than it
spends? Essentially, can Kenya ever rid itself of its addiction to
deficit and debt and for the first time aspire to a surplus? The answer
is a simple yes. But it’s a road fraught with difficulties at every
corner.
Instead of the government burdening the
existing workforce with extra taxes and slashing the much needed public
services, it’s time to talk about those sectors of our economy that are
not paying their fair share of taxes – the turns not taken, the
opportunities foregone: the taxes which could have spared us every turn
of the screw. No sector of the economy has enjoyed an easier ride than
the real estate sector. Land in Nairobi was last valued in 1980 and
current land rates had been levied at 17 per cent before being increased
to 34 per cent.
In areas such as the Central
Business District, it is hard to fathom the land appreciation that has
taken place in the last 35 years and subsequently the amount of
potential tax revenue that the Nairobi County could be earning. Making
it even worse is the fact that Nairobi’s last valuation roll only covers
less than a quarter of the total properties. It is encouraging to note
that City Hall has begun reviewing its valuation roll, with support from
the World Bank. The counties would also greatly benefit from this
initiative, as they would be able to finally raise additional income to
supplement what they receive from the national government.
The
Kenya Revenue Authority, and not the IMF, needs to be at the heart of
Kenya’s growth strategy. Through innovative technologies and capacity
building they can bring transparency and equity to public revenue
collection. It is the surest way of guaranteeing freedom and prosperity.
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