On August 30th and September 5th 2019, staff from Jesuit Hakimani Centre (JHC) visited Kisumu and Mombasa, respectively to advocate for promoting tax justice as a solution to the growing challenges of poverty and inequality in Kenya. The meetings involved religious leaders, representatives of the county assemblies (MCAs), technocrats in the local (county) government, representatives of local civil society organisations, community leaders, among others.
The increasing wealth gap in Kenya, as elsewhere, which is resulting into increasing numbers of poor people in the country, is also resulting into increasing levels of inequality in the Kenyan society. Of Kenya’s estimated 49.9 million people, 14.7 million (29.4%) are considered to be extremely poor (living on less than $1.9 a day) and 19 million are poor by multi-dimensional standards (lacking in many capabilities). While a small percentage of the population (about 8,900, less than 0.1%) owns a big portion of the wealth in the country and can afford to drive the economy and policies. The number of the super-rich is expected to grow in the coming years. The tragedy is that this wealth of this group of the super-rich does not translate into shared benefits for the rest of the country’s population, as the rich consider their wealth is a result of their hard work and choose to use it to sustain their preferred life-styles. Unemployment is rife and yet 70% of the population is youth, with 1 million joining the labour market every year and only about 150,000 getting the jobs. Borrowing by the government has led to more debt, with about 60% Debt-to-GDP ratio. Every year, there is an indicator in form of percentage growth in the economy, but who is actually growing?
The project being implemented by the JHC recommends taxation to increase revenue mobilization. This emanates from the idea that public revenue from taxation is more stable and more predictable than revenue from foreign aid and or domestic non-tax revenue sources. At the same time, it helps in income and wealth redistribution to reduce undue inequalities and service delivery.
For this to be effective, there needs to be better ways to collect tax revenue, allocate the revenue collected and monitor how it is used in the service delivery and development programmes of the country. With the bigger numbers of the people facing poverty, it is important that the expenditure of the public revenue takes due consideration of the need to allocate more towards pro-poor programmes that aid poverty eradication and provide the basic services. This should be guided by the fact that in addition to the principles of taxation based on the ability to pay and equity, there is need for the moral imperative of “the right to receive”.
Good as they may seem, taxes are very unpopular. As such, even among those able to pay, there are always attempts to avoid and even in extreme cases evade payment. Many prefer to declare less in terms of profits and hide away the excess from the watchful eyes of the tax man. Wealthy individuals and corporations also influence and lobby for favourable government policies and decisions to reduce their tax burden and obtain favourable treatment. Though some of this may be legal, it is sometimes unjustifiable because it leads to loopholes in tax laws and abuse of the system, e.g. to hide profits and even illegally acquired finances through unfair trade and corruption, costing Kenya over $1 billion annually, from these criminal activities and tax abuses.
From its roots in the Catholic Social Teaching to advocate for social justice, the JHC proposes that there should be: immediate efforts to reconsider the blanket incentives granted to the corporates, some of which end-up abusing them; critical assessment of corporations especially those engaged in the industries based on the use of resources of the common good; advocating for restoration of stolen resources and tax haven free zones; and those rich individuals and corporations should publish what they pay.
Side by side with all the above issues enumerated for advocacy, the ordinary Kenyan tax payers should realise that they have roles to play in: paying their fair share of the taxes and become involved in allocating and use of the revenue by those responsible for these processes. This calls for a more democratic system. The citizen and governance structures must both show willingness to engage in this in a more transparent way. This was a key point of emphasis during the meetings.