Since 2012, Kenya Revenue Authority (KRA) has increasingly missed its collection targets; the Covid-19 pandemic just exposed the soft underbelly that is KRA revenue collection efforts. Among 19 million voters, only 4.4 million people pay tax. But with the challenging economic situation, many can’t even afford to pay their bills.
KRA should lower the individual and corporation tax rates to entice people to pay taxes. Besides, lower registration fees and other statutory requirements to ease the cost of doing business. Many entrepreneurs opt to run informal businesses or remain small to avoid regulatory issues.
Millions of youth will participate in economic activity. Encouraging them to formalise their business with lower taxation will increase the tax base. Such a move will enable many businesses to grow. By being tax-compliant, they can go on to do business with the public and private sectors. They can expand beyond the borders too.
Languishing in poverty
Youth, the most energetic and productive demographic, is languishing in poverty. There is a need to change that. They don’t deserve to be spectators in their own country’s economic space, but rather, key players leading the post-Covid-19 recovery.
Lower the debt-to-GDP ratio; there is no need of hitting the debt ceiling or raising it. Fasten economic growth and the ratio goes down. It even gives us room for more borrowing!
The National Treasury, headed by Cabinet Secretary Ukur Yatani, should first work on triggering economic growth. It’s easier to repay loans when the economy is growing. One route to growth is Vision 2030 projects, which will improve the productive capacity of the economy. We’re better off investing our debt here than in recurrent expenditure.
Besides, the government can tap into the private sector to fund some of these projects. And it can free more funds for them by curbing wastefulness: Less fuel guzzlers, less foreign trips and less allowances.
It is also time to tie pay to productivity.
Mr Ndung’u is a Bachelor of Commerce student at Kenyatta University. email@example.com.