The Kenyan Tax Burden

                                       The Kenyan Tax Burden

By Maria Njoroge

In the words of Winston Churchill, "for a nation to try and tax itself into prosperity is like a man standing in a bucket and trying to lift himself by the handle. "  In its tax collection, I am afraid that the government has legalized theft. Life should not be this expensive. As I  was reporting to school this year, I walked into a convenience store to buy water and a soft drink. I was amazed at how expensive it was. I recently learned that this taxation is called exercise duty and is paid on imported or locally manufactured goods. Turning 18 opened a whole new world, and everything began a relationship with the Kenya Revenue Authority. Tell me, dear reader, do you even have the slightest idea about the Dynamics of this relationship?.

In Kenya, the taxes can be direct or indirect statutory taxes. Indirect statutory taxes apply to everything we purchase. They apply at our ports as customs duty, exercise duty, on all levies, and as value-added tax(VAT). Direct statutory taxes apply regarding Pay as You Earn, director fees, commissions, weekly wages, and monthly and annual salaries. The taxes are divided further, and the impact is felt throughout. The services we consume, the goods we buy, and everything we import and export are taxed.

I remember how lack of capital seemed like a point in passing in business class. However, research has taught me that capital is more than a start-up. Corporation tax is levied on all corporations. They remit up to 30% to the Kenya Revenue Authority. Non-residents in Kenya pay up to 37.5% in taxes annually. It is very expensive to Pay for licenses per annum as well as health fees and compliances with National Environmental Management Authority ( NEMA). The total calculations to be remitted for a business to be refrigerated before they even get everything started are crippling. The price of rent, goodwill, and costs before the break-even period is not encouraging for any start-up.

 The withholding task is paid on interests, dividends, pensions, performance fees, royalties, and commissions. The rates are flexible according to individuals and corporations. I do not understand why anyone would tax a pension someone has been remitting for all their working days. Everyone on a salary pays (PAYE). Over the covid 19 period, the government made an effort to offer tax relief to everyone earning less than 24,000. It was an attempt to ensure low-income earners could still afford to feed their families.

The future of tax relief is uncertain, and its sustainability is questionable. There is a bid in parliament to monitor mobile money transactions. The high court has, however, put a stop to this move. Residents of Kenya who make income here are taxed at different rates than non-residents. Those who are not citizens of a country only pay tax for income and wealth accrued for the period they have been in the country.

Our mobile data and airtime are expensive. There is a 10% levy of exercise duty on importation and 50 shillings for every ready-to-use sim card imported into the country. Data is currently the biggest source of exercise duty. It beats beer, wine, bottled water, cigarettes, and financial transactions. Considering that the county charges a 16% value-added tax, I pity the pockets of small-income earners.

The relationship between Kenya Revenue Authority and the taxpayer is far from clear or friendly. Many citizens must understand how taxation happens and what it means to their income and investments. The lessons on how and when to file tax returns still need to be clarified. It takes 1000 emails for someone to remember to file their returns on time before June. However, one explanation at a time, and we will make headway.