KRA Hosts The Annual Tax Summit: Building A Resilient And Progressive Tax System

The Kenya Revenue Authority (KRA) is hosting the 9th Annual Tax Summit with a focus on building a resilient and progressive tax system in Kenya while moving hand in hand with other countries within and without the continent.

The summit brings together experts in taxation and revenue creation from Kenya and other countries such as Mauritius on how countries can compare notes and enhance tax and revenue collection without hurting the populace.

The Summit is live on https://zoom.us/webinar/register/WN_JGYFvdxpTdeKFnf4USlLSg and anyone can attend, ask questions and listen in.

Speaking during the first session, Mr. Sudhamo Lal, the Director-General, of Mauritius Revenue Authority said that the taxpayer has to see and know what their taxes are doing to have trust and be motivated to pay taxes.

He says in Mauritius, things such as free education, free transport for senior citizens, as well as enhanced developments in terms of infrastructure are a testimony to taxpayers that their taxes are well utilized.

On his part, Mr. Darshan Shah from the Kenya Revenue Authority (KRA), Kenya needs a comprehensive Value Added Tax (VAT) system that can help the government collect enough revenue for economic development.

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As the Summit goes on, Kenya, like many emerging economies, has faced challenges in establishing a tax system that is both resilient and progressive. Historically, it relied heavily on indirect taxes, such as Value Added Tax (VAT), which can disproportionately affect low-income citizens. The time has come to shift gears and steer towards a more progressive tax structure.

The COVID-19 pandemic, though disruptive, offered an opportunity for reflection. Kenya’s fiscal authorities recognized the need to diversify the tax base, ensuring that revenue is generated fairly and sustainably. This journey began with introducing digital service taxes, a bold step forward in acknowledging the modern economy’s shifting sands.

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Building resilience into Kenya’s tax system is about creating a financial safety net that can weather storms, economic downturns, and external shocks. It’s about ensuring that the government can continue to provide essential services and invest in infrastructure even when faced with challenges.

Kenya’s resilience will be built through:

1. Diversification of Revenue Streams: A strong tax system in Kenya isn’t overly reliant on a single source of income. The government is actively expanding the tax base, including digital services, land reforms, and agricultural products. This diversification creates a more robust and resilient financial foundation.
2. Efficiency and Transparency: A well-functioning tax collection process reduces opportunities for evasion and corruption. Automation and digitalization play a pivotal role in making the system more efficient, transparent, and capable of adapting to changing circumstances.
3. Contingency Planning: Preparedness is key. Developing contingency plans for economic crises and external shocks ensures the government can continue its operations and service delivery, even in challenging times.

At the same time, a progressive tax system is about equity and inclusivity. It’s about sharing the tax burden fairly and promoting income equality. As Kenya marches towards progress, its tax system must evolve to better serve its citizens.

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Progressivity is being achieved through:

1. Reformed Income Tax: Revising the income tax brackets and rates to ensure higher earners pay their fair share. This approach helps fund essential services and infrastructure while reducing the tax burden on low-income individuals and small businesses.
2. Targeted Social Programs: Using tax revenues to fund targeted social programs can mitigate income inequality. Kenya can empower its citizens by investing in education, healthcare, and social safety nets and creating opportunities for all.
3. Incentivizing Investment: Tax incentives for strategic sectors like renewable energy, technology, and agriculture stimulate economic growth and job creation, directly benefiting the population.

Building a resilient and progressive tax system in Kenya is not without its challenges. Resistance to change, enforcement issues, and a shifting political landscape can all pose hurdles. However, these challenges should be seen as opportunities to refine the system and make it even more robust.

Kenya’s pursuit of a tax system that fuels progress is a testament to its ambition. As the nation continues to harness the power of its diverse population and abundant resources, it sets a shining example for the African continent and the world.

In the end, it’s not just about collecting revenue; it’s about shaping a nation’s future. Kenya is on the cusp of a new era, one where resilience and progressivity pave the way for a brighter tomorrow, ensuring that every citizen has a chance to thrive and contribute to the country’s ongoing success. The journey may be challenging, but it’s a journey well worth taking.

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