As expected the prices of basic commodities have
increased after the VAT Act took effect. Since the changes have also
affected electricity charges, the costs of these commodities are
expected to rise even further since energy is a high component of
production. This will make life for the ordinary Kenyans even more
difficult than it already is as the cost of living will go up on
account of rising inflation.
The changes introduced to the VAT law,
we are told, are geared towards attaining simplicity in the tax regime.
However, fiscal policy reforms should be entrenched to enhance tax
collection so that we avoid the seemingly easier route of taxing basic
commodities which hurt the common mwananchi.
KRA must deepen and broaden its
coverage ensure that revenue is collected from Kenyans who are
currently not captured by the tax regime especially those in the huge
transport and real estate sectors. KRA must also eliminate corruption
within the tax system to ensure revenue is collected and seal loopholes
that are exploited by tax evasion. We can raise more than the
requisite revenue in this way and avoid the temptation to tax basic
commodities that ordinary Kenyans depend on.
As I have always said, as we seek to
improve revenue management we must also curb wasteful recurrent
expenditure. Controlling government's recurrent expenditure is the only
way we can put government's appetite for revenue in check.
Taxes are what decent societies pay for
services. Therefore, while it is the right of the government to levy
and collect taxes, it is the right of the people to get the services
for which they pay. For Kenyans to appreciate taxation, the fiscal
policy framework must promote fairness and justice while also ensuring
that the tax we pay visibly contributes to socio-economic development
by way of service delivery.
Peter Kenneth
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