Taxed Like the Wealthy, Served Like the Poor: The Unseen Price Of Kenya’s Broken Tax System

Kenya is a nation that has long struggled with a paradox of taxation and service delivery. The people of Kenya pay taxes at rates that are comparable to some of the wealthiest nations in the world, such as Norway, Switzerland, and Finland. Yet, the services we receive are often subpar, with infrastructure crumbling, healthcare systems in disarray, and public services consistently falling short of expectations. This gap between the tax burden and the value received raises important questions about the integrity of the tax system and the effectiveness of government spending.

The Kenya Revenue Authority (KRA) reports that there are approximately 9.7 million active taxpayers in the 2023/2024 fiscal year. While this number sounds impressive, it represents only a small fraction of the country’s potential tax base. Kenya, with a population of over 50 million people, has a tax compliance rate that is far below what is needed for sustainable development. This leaves the burden of taxation on a select few, often overburdening the middle class and small businesses while large corporations and the political elite find ways to evade or reduce their tax liability. This imbalance in the tax system is exacerbated by the frequent reports of corruption, which further erode public trust in the government’s ability to use tax revenue effectively.

To add insult to injury, KRA’s recent move to access M-Pesa and bank account balances has raised concerns among the public. While the agency argues that this is necessary to streamline tax collection and curb tax evasion, many Kenyans view it as an invasion of privacy and an overreach by the government. The idea of government agencies having direct access to personal financial information feels intrusive and unsettling, especially given the history of corruption and misuse of public resources. For many, this is the final straw in a series of tax policies that seem more focused on control and punishment than on fostering a fair and transparent system.

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The question then arises: what exactly are Kenyans getting in return for the taxes they pay? For a nation that has been heavily taxed, the lack of visible improvements in public services is stark. Roads remain in poor condition, hospitals are underfunded and understaffed, and public schools are overcrowded and under-resourced. The gap between the tax rates and the quality of services has led to a growing sense of disillusionment. When taxes are paid, citizens expect to see tangible improvements in the quality of their lives. However, all too often, they are left with nothing but the frustration of seeing their hard-earned money siphoned off into the pockets of corrupt officials.

It is important to understand that this issue is not just about tax rates or government inefficiency; it is about a broader systemic failure. Kenya’s tax system, though progressive on paper, is plagued by structural weaknesses. The informal sector, which makes up a significant portion of the economy, is not adequately taxed, and many businesses find ways to evade paying their fair share. The tax base is narrow, and those who do pay taxes often feel as though they are shouldering the entire burden of the nation’s development. This inequity contributes to a cycle of poverty and inequality, where the rich continue to get richer, while the poor bear the brunt of the government’s failure to provide basic services.

The issue of corruption cannot be overlooked in this conversation. It is no secret that corruption is rampant at all levels of government, and public funds are regularly misused. Reports of inflated contracts, ghost workers, and kickbacks are common, and many taxpayers feel as though their contributions are being siphoned off by unscrupulous officials. In a country where corruption is so deeply entrenched, it is hard to trust that tax revenue is being used for its intended purposes. The growing wealth of politicians and public servants, many of whom have amassed fortunes in short periods of time, is a testament to the failure of the system. This disparity between the income of public officials and the poverty of the masses only fuels the sense of injustice that many Kenyans feel.

However, it is important to recognize that taxes are necessary for the functioning of any government. In an ideal system, tax revenue is used to fund essential services, such as education, healthcare, infrastructure, and security. But when these services are inadequate, it raises the question of whether the government is truly serving the people. The failure to deliver on the promises made to taxpayers undermines the social contract between the government and its citizens. When taxes are paid, there is an expectation that the government will act in the best interests of the people, but in Kenya, that trust has been eroded by years of mismanagement and abuse of power.

One of the most significant challenges facing Kenya today is the lack of accountability in government. Public officials are rarely held to account for their actions, and even when scandals break, there are few consequences. The lack of transparency in government spending and decision-making makes it difficult for citizens to hold their leaders accountable. This lack of accountability is a major driver of corruption and inefficiency, as officials feel emboldened to misuse public funds without fear of reprisal.

Moreover, Kenya’s tax system is not designed to promote economic growth or encourage investment. High tax rates and complex regulations make it difficult for businesses to thrive, especially small and medium-sized enterprises. The tax burden on these businesses is often so heavy that it stifles innovation and discourages entrepreneurship. In a country where job creation is desperately needed, a tax system that hinders business growth is a significant obstacle to development.

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The government’s failure to properly utilize tax revenue has also led to widespread inequality. Despite the country’s growing economy, the benefits of this growth have not been evenly distributed. The wealth gap between the rich and the poor continues to widen, and many Kenyans are left struggling to make ends meet. This inequality is a direct result of the misallocation of resources and the failure to invest in key areas such as education, healthcare, and infrastructure. When public funds are misused or misallocated, it is the most vulnerable members of society who suffer the most.

It is essential for the Kenyan government to address these systemic issues in order to restore public trust in the tax system. Reforms are needed to ensure that tax revenue is used efficiently and effectively. There needs to be a greater emphasis on transparency, accountability, and good governance. The government must also work to expand the tax base by bringing the informal sector into the fold and ensuring that all businesses pay their fair share. Only then will taxpayers begin to feel that they are getting value for their money.

The move by KRA to access M-Pesa and bank account balances is a step in the right direction in terms of increasing tax compliance, but it must be done with caution. The government must ensure that this move does not infringe on the rights of individuals or lead to further abuse of power. There must be clear guidelines on how this information will be used and protected. The public must also be assured that the data will not be misused or exploited by corrupt officials. Without this assurance, the move could backfire and lead to greater distrust in the tax system.

Ultimately, the issue of taxation in Kenya is about more than just paying taxes. It is about holding the government accountable for how it uses public funds. It is about ensuring that taxpayers receive value for their money and that public services are adequately funded. It is about creating a system that promotes economic growth, reduces inequality, and fosters good governance. If Kenya is to reach its full potential, it must reform its tax system and ensure that every Kenyan, regardless of their income, has a stake in the country’s future.

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