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Government must tread carefully on taxation

Tuesday, November 1st, 2022 04:30 | By
New CRA team must share resources well
Kenya Revenue Authority. PHOTO/Courtesy

Students of political science and economics often refer to history to reflect on how it relates to current conditions affecting citizens in their nations.

These reflections reveal remarkable historical similarities in the “struggle” narratives of people across all continents for freedom, identity and an improved way of life.

Current grim economic conditions facing Kenyans and the vulnerable in other developing nations mirror the struggles that prevailed in two continents in the late 18th century.

The American and French Revolutions were fought several years and an ocean apart. Yet they were similar in that they subverted an existing monarchical government. They both also created ripe conditions for constitutionalism and deep patriotism.

What lessons can Kenya learn from the two revolutions, particularly in view of the prevailing economic woes haunting citizens? The two revolutions influenced one another and had profound worldwide impact.

Monumental scholarly works, rich debate and information exist on these historic revolutions.

However, they share one distinct similarity that forms a subject of keen interest to Kenyans – they were both borne of dire economic conditions.

We have just come through a divisive election that in essence has left the nation as divided politically as it was before 9 August. But citizens across the political divide are singularly united in suffering the economic challenges that contributed to the basis for the two revolutions.

The new government based its campaigns on addressing economic problems facing the poor and downtrodden in society, coining the “hustler” and “bottom-up” economics that resonated with this class of voters.

In post-election reality, the new administration is confronted with the task of raising money to fulfill its promises and transform a battered economy burdened by rampant poverty, high public debt, unemployment, corruption and an abysmal lack of basic social care.

Ironically the main available channel for raising the money to meet these obligations amid this litany of economic woes is taxation.

It is a delicate task that must be handled with extreme caution as it mirrors the conditions that caused the American and French Revolutions.

Both had money-related woes and the financial pressures (taxation) the monarchies in the British colony and the French nation placed on their subjects. Not that they opposed the taxation itself, but they were more vexed by the lack of a reasonable basis for the taxation, giving rise to the phenomenon known as “taxation without representation”.

Adopting a curious macroeconomic management approach in a liberalized economy, how does government expect to rope in citizens to tax? This when they do not have an income or are barely surviving on less than a dollar a day, as most “hustlers” and the majority poor in the rural areas do?

The dismal pre-revolution French economy depicts images of hungry, poverty-stricken peasants. Unable to pay off national debts using the scant money it received on the tax for traded goods, the King imposed further taxes on the peasants.

Paradoxically the wealthiest were not obligated to pay taxes, thereby pulling the two social classes apart. The two revolutions provide critical lessons for Kenya and other African nations.

The tax-related woes were related to greed (read corruption), exploitative control and were more deeply rooted in a historic division of social class.

Although the rich and poor had been long separated, unfair taxation totally isolated the two groups.

This resulted in famine and extreme poverty for the lower classes, leaving them with no choice but to revolt.

— The writer comments on political and economic affairs

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