There’s more to Finance Bill beyond housing levy

Monday, June 5th, 2023 01:30 | By
President William Ruto at a past function.
President William Ruto at a past function. PHOTO/Courtesy

Word on the ground is that the finance bill is fait accompli. We have focused on the housing fund but there is more in the bill. VAT on fuel is moving to 16 per cent and there is a proposal to tax content producers, which makes a lot of sense given the government’s focus on the digital economy and the boom that creative content producers have enjoyed in the recent years. There is also the turnover tax at three per cent and you realise that besides the housing fund there is quite a lot to exercise our minds on and watch keenly as MPs discourse the bill in parliament.

Well, in our multiparty democracy, which is both representative and deliberative, the ruling party that forms government has the leeway to make decisions based on what they approximate to represent the average best interest of the people they represent. That simply means that Kenya Kwanza legislators and leadership have within the understanding of democracy, the power given to them to make decisions that may not necessarily represent the deliberative consensus of the people who gave them power but settle on a decision that present the best viable option for the people based on the leadership’s understanding of issues. Therefore, if the plan and the attendant finance bill that if passed will serve the interest of Kenyans, then KK is within its democratic right to whip MPs to pass the bill.

In fact, the executive in an ideal democracy, depends on its legislative arm to provide the necessary legislation that would enforce its good policies and make it easy for the executive deliver on its mandate and promises to the electorate. But even as we resign to the fact that parliament given the UDA and KK numbers will do that which serves the ruling regime, we need a clearer understanding of the bigger picture.

A look at the housing fund for instance raises fundamental questions. If we have 2000 houses built in every constituency, what exactly will we be solving? Granted, the labour force engaged will be in employment, but beyond that and upon completion of these houses, won’t we still be having rural to urban migration? And wouldn’t urban squalor still be a problem. I guess the bigger picture here does not end in the 2000 houses that will be built. For instance, in my native Suna East, the key question is how to keep those of us living in those houses in some gainful employment in the wider Migori County.

In an already inflationary economic environment, how affordable will the houses be given that increase in just the cost of fuel is likely to have a multiplier effect on the other factors of production. Then, for those who are in fund for savings, that is, if eventually they don’t get the houses, what will be the return on savings be given that there is a 15% withholding tax plus inflation?

But let as assume that the housing fund, given the furore it has generated, is dropped - what else should we interrogate further? Well, there is the three per cent turnover tax and probably the question is not that the government will take three per cent of hustlers’ turnover before they even ascertain whether they have made profit or loss, but how enabling will the environment be when this finance bill passes, to guarantee higher turnovers? You see, with higher turnovers the probability of good profit margins is high. But how does the 16 per cent VAT on fuel and the proposal that would compel businesses to first pay taxes while pursuing dispute resolution provide for a conducive business climate?

This does not to mean that these proposals are not good, it is only that government communication falls short on the why and how. The good news is that this regime is open in communication and prominent in the public domain as they push their agenda. The beauty of communication made in the public by leaders, is the commitment it increases on their side and the scrutiny it affords the citizenry. We can be the go-to country, but when we talk about an enabling environment, we need to be alive to the fact that at the doorstep on an enabling environment is tax breaks and reliefs.

— The writer is a PhD candidate in political communication

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