Columnists
The debate Kenyans need to have: when and how to broaden tax base
Wednesday August 09 2023
What a tangled web we weave around what we want from the government, and what we expect to pay for. FILE PHOTO | NMG
What a tangled web we weave around what we want from government, and what we expect to pay for that — most especially in an environment dominated by our belief, and the partial reality, that public funds are the cookie jar for politicians and civil servants funding luxury lifestyles.
Yet our lopsided take on this equation is moving us all ever closer to a cliff edge. For our ‘government should’ wish list is remarkably long, even omnipresent.
But how often do we align it with how the government is going to fund it and who is going to pay?
The result of that gap in our ‘government should’ discourse is a pervasive expectation of service that could never be funded by the country’s minority of taxpayers.
In a world of political beauty contests that have led to bonuses, such as aid grants that pay for critical areas, such as tuberculosis and HIV/Aids treatment.
But it has also led to soaring debt, with universal healthcare, geothermal energy, and expanded infrastructure far beyond the reach of our tax take, and, thus, funded through borrowing.
The borrowing has a logic, but, in our case, the chain is broken. These long-term mega projects will boost our productivity and earnings.
From there, the rationale is that this will generate more taxes, which will be the extra to cover the repayment of the project loans, and then keep on, in a virtuous spiral of growing wealth and growing government finance, after the project loans are covered.
The glaring hole, however, in our own model, is the scant number of people paying direct taxes.
That is now booting up our indirect taxes on fuel, and on almost all consumer goods, and even workplace tools, such as software. And it’s still not enough to fill the gap.
The risk, eventually, and some even believe imminently, is of financial default by our government — where it just cannot raise the funds to cover its costs, including its loan repayments.
It is not widely understood how catastrophic that can be, once banks see their balance sheets locked up in unserved government debt, hospital supplies stop flowing, doctors don’t get paid, nor teachers, ministry staff, or even pensioners.
Yet maybe the debate we ‘should’ be having is not when the government’s finances will fold under the weight of its too-great financial commitments and its too-small tax income, but when and how we broaden our tax base, what we are willing to pay for in taxes, and what we stop saying the government ‘should’ do and start doing for ourselves.
Of course, we can, instead, complain about everything and keep asking the impossible. And then live the calamity when the impossible proves impossible.
The writer is a development communication specialist.
