Here is why you should support the Kenya Finance Bill 2023
Kenyans are signing a petition to oppose the passing of Kenya Finance Bill 2023. Their reasons for the opposition to the bill include the introduction of a 35% tax rate for income above shs. 500,000 per month, the introduction of a 15% withholding tax on income earned by digital content creators, the increase of the VAT rate on petroleum products from 8% to 16%, and the increase of the turnover tax from 1% to 3%. Accordingly, many Kenyans think that these tax changes will adversely affect the business environment and consequently impact the ever-rising cost of living.
But the opposition to Finance Bill 2023 is not unexpected. Kenyans have been known to oppose almost all finance bills going back to the colonial era. In recent times, Kenyans opposed the finance bill introduced by David Mwiraria in 2002 that sought to impose a 16 percent value-added tax (VAT) on essential commodities such as maize flour, milk, bread, and kerosene. In 2018, Kenyans were outraged by the finance bill that sought to implement a 16 percent VAT on petroleum products, among other tax measures. The bill was part of the government’s commitment to the International Monetary Fund (IMF) to reduce its public debt and fiscal deficit.
The opposition to finance bills by Kenyans is nothing but the typical lazy attitude where people want to gain without pain. Kenyans want the economy to continue growing, but they don’t want the government to raise money for the growth. Usually, the government has only two options to raise revenue; 1. Taxation and 2. Borrowing – options that Kenyans are always opposed to. So, what do you want the government to do?
Of course, I appreciate that both taxation and borrowing should not be overdone. For one, over-taxation can reduce disposable income and profits and hence end up discouraging people from working, hampering investments, dragging innovation, and reducing consumption. Over borrowing on the other hand usually leads to higher interest rates, higher inflation, and higher debt burden. Actually, the economic nightmare Kenya is currently swimming in is largely a result of the over-borrowing the Jubilee government engaged in between 2013 and 2022.
Since the country has found itself in an economic nightmare caused by over-borrowing, we cannot support borrowing as a solution to the current crisis. We are therefore left with only one option, to overtax. The government needs to raise money both to ensure continued economic growth and at the same time pay back overdue loans. This can only happen when Kenyans are willing to sacrifice their disposal income and support the government in ensuring that the economy remains viable. And that’s the reason why everyone should support the Finance Bill 2023.
The specific reasons for supporting the Kenya Finance Bill 2023 include:
- Enhance revenue mobilization and collection by expanding the tax base, rationalizing tax exemptions and incentives, and strengthening tax administration and compliance.
- Support economic recovery and growth by providing fiscal stimulus, promoting investment and innovation, and facilitating trade and competitiveness.
- Promote fiscal responsibility and sustainability by adhering to the fiscal rules and targets, reducing the fiscal deficit and debt levels, enhancing transparency and accountability, and
- Address social and environmental challenges by allocating resources to priority sectors such as health, education, social protection, agriculture, and climate change mitigation and adaptation.