Oppressive Tax Rates Dimming the Future for Investors

A follow up on the number of loans Kenya owes the World Bank and China reveals a sorry state that the country will soon find itself in; borrowing to survive.

Both China and the World Bank seem to be competing on who should give Kenya more loans and this could easily lead our economy into depression.

The government has, on the other hand, continued to enact exploitive tax rates such as; the 12 percent excise duty charged on mobile money transfer services and the 16 percent Value Added Tax (VAT) charged on all petroleum products, bound to raise the cost of running any business but it is probably the presumptive 15 percent tax of the single business permit gotten from the county governments for all the businesses that exceed 5 million shillings annually and a 35 percent tax on people who earn 9 million shillings per year which when broken down is  750,000 shillings on a monthly basis from a previous 30 percent crippling the high income earners and discouraging financial growth.

Debts for impoverished countries have in a number of times been forgiven and this has probably gone further to encourage countries like Kenya to continue borrowing beyond their means. Kenya is unlikely to ever repay the loans it’s borrowing given that a large percent of the loans are not accounted for and result in scandals.

Previous national financial scandals were looting of what little Kenya had, well, the saddest state of affairs currently is that looting is of the loans Kenya is borrowing paralyzing any possibility of ever repaying the loans which will finally leave the country at the mercy of its debtors.

High tax rates are a sure way to scare off investors and kick out those already settled in the country.  The life of an entrepreneurial Kenyan is bound to get hard and the chances of an upcoming entrepreneur even harder which begs the question “how then does the Government plan to achieve any of its Big Four Agendas in the next four years?” African countries have the lowest wage workers yet a majority of investors continue to shy away from establishing because of the oppressive tax rates with an addition of Value Added Tax (VAT) and one would hence not expect the rates to continue ballooning.

The current oppressive tax rates, with the 16 percent on fuel being the most current, are probably to prove that we can repay our loans with the Government’s appetite on borrowing now seeming as greed. It is economically suicidal as exploitive tax cannot raise money since it already paralyzes the economy.

Oppressive tax rates is not the way to develop this country, neither is it the way to service our loans; it is another way to sabotage this country’s economy after corruption has had its better share. Reasonably, tax in Kenya is destroying the hope of development and is leading to economic depression with a future of higher numbers of unemployment, disease, and crime.