Comprehensive Analysis Of Taxation In Kenya: Burdens, Purpose, And Why Kenyans Need To Wake Up And Demand Better From Their Taxes
KEY POINTS
We deserve free healthcare in every aspect. We deserve better security across the country in every region. The government is well-funded to ensure this happens.
KEY TAKEAWAYS
Demand: Through this tax, the government is meant to ensure it protects the local manufacturing and production industries in a sustainable manner that will see Kenya being able to compete well with other countries and ensure a more inward flow of knowledge and wealth.
As I write this, I am very furious. Why, you may ask… I am watching the mess we call a debate in Parliament in regard to the Finance Bill 2023 and how the caliber of the debate is not only saddening but infuriating. Through my anger, I realized that many Kenyans have no idea what taxes, levies, charges, and funds we pay to the government for better services and hence, making it very difficult for us to hold the government accountable and demand better.
I realized that it is important for Kenyans to know what type of taxes, levies, etc we pay so that we can understand how the government functions and how best to hold them to account. This gave me the idea to write on the majority of the most known taxes, levies, etc as a way to start the process of educating my fellow Kenyans.
The purpose of this article is to provide Kenyans with an overview of the various taxes, levies, fees, charges, and other financial obligations imposed by the Government of Kenya on us so that we can have a better understanding of the tax issues as we debate the Finance Bill 2023. Ignorance is no defense.
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By examining the nature and purpose of each tax, I, Soko Analyst, aim to shed light on the concerns raised by Kenyans regarding the perceived high tax burden. I hope, together, we can have a better conversation around the issue of taxation.
Income Tax:
Purpose: Income tax is the primary source of revenue for the government. It is levied on individuals and businesses based on their income or profits.
Example: Personal Income Tax – Individuals pay a progressive tax rate ranging from 10% to 30% based on their income levels.
Demand: Through this, we as Kenyans deserve free Education all the way to the Tertiary level. We deserve free healthcare in every aspect. We deserve better security across the country in every region. The government is well-funded to ensure this happens. But do we know this? Are we ready to demand better?
Value Added Tax (VAT):
Purpose: VAT is a consumption tax levied on the value added at each stage of the supply chain.
Example: Standard VAT – Most goods and services are subject to a standard rate of 16% VAT, which is included in their selling price.
Demand: Through this, we deserve to have the best business environment any government can give its people so that we can grow our wealth, create more jobs and ensure our children have a better future.
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Excise Duty:
Purpose: Excise duty is imposed on specific goods manufactured, imported, or consumed within Kenya.
Example: Excise Duty on Alcohol and Tobacco – Alcoholic beverages and tobacco products are subject to excise duty to discourage excessive consumption.
Demand: Most times, this is referred to as the “Sin Tax” and it’s unfortunate that this sin tax has been extended to mandatory basic items like water and it is only repugnant but evil. These taxes are meant to ensure that the business environment is keen on a sustainable positive business environment and that the societies in which these businesses operate are direct beneficiaries of these businesses.