OUR 2023 KE TAXATION

Let’s look at the taxation that we have had to say hello to this year, and for the sake of today’s article, I will only focus on the individual bracket and not a body corporate.

For a salaried person, you have Housing Levy as a new tax deduction on your income, and if your income is above 500k per month it gets worse for you as your Tax bracket also changes from 30% to 32 & if you earn more than 800k yours went to 35%.

Now for the business industry, the PAYE deductions aren’t a relatable concern to you, and that leads me to one of the other taxes that are more “non-discriminatory” I put this in brackets because is it really though, Let's focus and not be distracted, shall we?

Onto one tax that addressed us all without any employment discrimination is the doubling of VAT on fuel, this doesn’t matter whether you drive or use public means to commute, as it saw all the PSVs adjust their fare rates upwards with and the same cut through all products because when diesel prices go up, the ripple effect is that production and manufacturing of products go up meaning almost all costs of production of goods are bound to adjust upwards, and this we have already witnessed.

To try understand why these effects were made, allow me to attempt to make it make sense, and maybe give you a different perspective. Remember the high level of loan appetite we seem to have as a people? Yes!

Great, for a minute think of the terms that are given as you are getting a loan, the lender stipulates the T&C to you, right? That’s what’s happening to us as a Nation, it’s because the loan lenders to our Country needed to see “strategic ways” that our government plans on raising funds to offset the loan, and Taxation is one of the levers that the government can use to argue out their cases, please note I said one of the levers is not the only one, however, one of them and albeit the most convenient, and don’t we all love what’s most convenient?

Here’s how I assume the debate went for these taxations to make sense & for them to be approved,

According to the data available, we have XYZ on the employment bracket from this we collect ABC as PAYE, now if we add 1.5% as Housing Levy that will see us collect an additional JKL out of this we use X% to fund the construction of affordable housing and the balance offsets the loans, to make sure that this works we add a clause that indicates only people below a certain income will be eligible for the affordable housing houses, meaning we can afford to split the funds and still deliver the affordable housing. (AND THIS MADE SENSE AND WAS HENCE EFFECTED) Does it mean the houses will be built? Your guess is as good as mine

On to the doubling of the fuel VAT, again, from the data available the fuel consumption in period XYZ was ABC and hence were able to collect JKL in Tax, now if the fuel consumption remains the same and we double the VAT from 8% to 16% this will see double that revenue. However, this is working under the assumption that all factors remain constant. Are the factors constant though?

NO, they are not this is because the disposable income of the person expected to consume the same amount of fuel is not the same as it was, why? Re-read the first few paragraphs

RIPPLE EFFECT

If there are several of us who work & live in nearby neighborhoods we opt to car pull instead of each of us driving, if we used to each do a weekend gate away drive to enjoy some wild moments & some nyama choma we make that twice in a month activity instead & reduce the nyama quantity while at it, meaning the flow of monies in the economy is affected and the truth is what was expected is not realized. According to a Business Daily article I read the monies collected after all the multiple Taxes were implemented were less than what had been collected before the period before

CHECKS & BALANCES

Does this mean that the above couldn’t have been predicted? I submit to you that it was, there are some of the best CPAs sitting down to debate some of these things before a decision is made, however, given the choice between presenting the HARD TRUTHS and the BEAUTIFUL LIE your guess is as good as mine as to what option was opted for, and serious panel biting also accompanied the defense proposal to ensure that all potential loopholes that would prevent the deal from going through were sealed.

That’s it from me today, see you next Friday as we take a look at VAT