Rethink the ‘tax and spend’ strategy

As they say in my corner of the woods, things are becoming elephant in this country; everyone wants more money but no one, except the government, seems to know where to get it from.

It has, consequently, resorted to trying to pluck the low-hanging fruits from a tree whose branches are steadily withering, using the taxman as the handyman. At this rate, one day, there will be a reckoning, but apparently, very few people care about that, for there is not enough time to go philosophical on such mundane issues when the country is crying out for growth, development and prosperity at any cost.

There is no point in dwelling on the highly contentious issue of the housing development levy that everyone has been talking about in which the government appears intent on building houses for the poor by imposing a mandatory tax on highly indignant salaried employees, for somehow, the issue will be resolved one way or the other.

But there seems to be more than meets the eye on this fixation with the housing levy, which may lend credence to the belief that it is a red herring of sorts to distract the attention of Kenyans from proposed taxation measures that will have even more dire consequences in the long run.

Almost forgotten is the 16 per cent VAT increase on fuel prices that will have a spiral effect on the prices of everything else, especially essential food commodities. 

Already, the Central Bank is warning that the prices of maize flour, sugar, bread, eggs, rice and cooking oil will remain high this month, and this is even before the contentious Finance Bill is passed. So will transportation costs which will affect, not just the middle class, but everyone else striving to stay afloat in this tanking economy.

It would be expected that Kenyans would take a broader view and realise that the housing levy will affect only a tiny proportion of Kenyans dwelling on a single issue, while millions will be affected by the total effect of a tax-and-spend policy that the government seems to have adopted.

Those who go beyond emotional responses to measures ostensibly meant to help the masses have come to realise that perhaps the government would have been wiser to try and control expenditure by sealing all the loopholes through which its revenues are siphoned, instead of taxing everything on sight.

As a renowned economist has pointed out, the problem with Kenya’s economy is not one of inadequate revenue collection but one of profligacy and improvidence in government spending, as well as wanton thievery in high places. Should these vices not be curbed, no amount of taxes collected will ever suffice.

Taken for granted 

Having let off steam on the high taxation issue, it is now time to go on to a more interesting subject— the apparent naivety of Members of County Assembly and their poor timing. They could not have chosen a worse moment to agitate for a salary raise. Certainly, the country’s MCAs not only have a right to seek higher remuneration, but they deserve it too.

This group of politicians has been taken for granted for too long, and they are seething. They are vital to the success of devolution and a safeguard against the country returning to the dark ages of autocracy.

However, something strange happened last year, just before the elections. People who had been earning Sh365,000 per month, including allowances, were suddenly told that from February this year, they would start earning Sh144,375. What happened was that their basic pay was truncated, and a number of allowances removed altogether. Who wouldn’t protest at such gross injustice, especially at a time when county assembly speakers are taking home Sh525,525 and their governors Sh924,000, including allowances?

The only problem with the current agitation by MCAs is that it comes at the wrong time. At a time when prisoners are said to be on the verge of starvation, schools are about to close because there is no money to feed the students, at a time when salaries for civil servants are paid late in the month and the whole country is in a ferment due to a proposed tax regime deemed too oppressive, who will listen to their cries of woe? Even when one sympathises with the Nakuru MCAs who on Tuesday took the courageous step of going on strike and now expect others to follow suit, such tactics are unlikely to work at the moment.

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Now that the NHIF is back in the news due to chronic mismanagement and other issues, perhaps we in the media should give it a break by referring to it in its correct long form. Is it the National “Health” or National “Hospital” Insurance Fund? You will find both versions used interchangeably in the newspapers — sometimes on TV — often in the same story. 

This may appear to be a trivial issue, but quite frankly, it can be irritating. Official records tell us that the broke government institution is a hospital fund and ought to remain so until its owner decides otherwise. What sounds right is not always correct.

Mr Ngwiri is a consultant editor; [email protected].