What the hell is a motor vehicle circulation tax? Is it a ‘sin tax’, a ‘nudge tax’, a ‘green tax’ or a ‘carbon tax’? Where has the State derived the constitutional authority to introduce this strange impost on citizens of this country?
On the Finance Bill, 2024, I think we are now at a point where we have to reach out to one of our public-spirited litigation campaigners — the likes of Senator Okiya Omtatah— to file a case in a constitutional court to interrogate and test whether the supreme law gives the State a carte blanche to arbitrarily introduce strange charges on the citizen merely because the government is unable to balance its books.
I can’t wait to see and hear somebody move to court to express itself on the big philosophical and constitutional questions that arise in a context where a foreign entity— in this case, the IMF— connives with the State to impose an oppressive and punitive taxation regime on citizens as a condition for receiving bailout money from the foreign lender.
We must not forget that the Finance Bill, 2024 is but a child of the IMF-sponsored and so-called Medium Term Review Strategy (MTRS) under which the government committed to implement an excessive number of new tax measures on the people.
From documents I have read on the IMF’s website, the list of decisions the government committed to implement in Finance Bill, 2024 include a carbon tax and a motor vehicle circulation tax, removal of several exemptions on interest income, and removal of exemptions on VAT and customs duties.
Others are increases of excise rates on money transfers and telecommunications data services, and increase of VAT on petroleum products.
Also included in the conditionality regime are the so-called ‘non tax' revenues where the government has made a commitment to the IMF to increase fees and charges related to immigration and citizen services (passports and national IDs) and land ownership transactions (stamp duty, title deeds).
Clearly, what the government and the IMF have negotiated for citizens is a tax regime that over-relies on consumption taxes that are regressive — attacking the living standards of the poor— and only serve to entrench inequality.
Just pause to ponder the gravity of the inequality and retrogressive scenario which these new taxes portend: today, when a wealthy man buys and pays for talk time or buys data bundles to access the internet, he will pay VAT and excise duty at the same high rates introduced by the IMF-sponsored policies as poverty-stricken Atieno who lives in the slums.
When a rich man applies for a national identity card today, he will be paying the very same fees as the poor man from Korogocho who is not able to get a regular meal.
We are in an environment where the taxman will now demand a bigger pound of flesh from you as you withdraw money from your ATM, nail you as you make an over-the-counter withdrawal and raid your pockets when all you have done is to make an urgent mobile phone call or sent some M-Pesa to your sick mother living in the countryside.
I ask: what are we trying to achieve by introducing these punitive taxes? Have we considered the health of individuals and businesses? It is all in the name ‘broadening the tax base’, ‘front-loading fiscal consolidation efforts to mitigate debt vulnerabilities’, and seeking to ‘achieve a new debt anchor for Kenya by 2029’
The government must start living within its means, increase Kenya’s tax to GDP ratio to 16 percent and bring down the fiscal deficit to the target level agreed with the IMF which is 4.5 percent of GDP by 2027.
Punitive taxation is just a foil for lack of new ideas. The IMF- imposed austerity programme we are implementing right now is anchored in dogmas of the 1980s economic thinking.
They have been debunked by some of the leading economists, including some of the luminaries who designed them, including Jeffrey Sachs of the shock therapy fame, and the Nobel laureates, Paul Krugman and Joseph Stiglitz.
Our economy is in a horrendous slump; a combination of record indebtedness and anaemic growth. The conditions need vigorous responses to shake up and restructure the economy. Fiddling with taxes won’t save this economy.
The writer is a former managing editor of The EastAfrican.
