Why we should not celebrate firms leaving Kenya
“Taxation must afflict the comfortable and comfort the afflicted.” What a catchphrase by the maverick CS Moses Kuria! What if it was that simple? Like as simple as getting resources from the comfortable and making the afflicted comfortable.
Well, hustlers could be over the moon hearing such statements made against the backdrop of taxes targeting big corporations and increasingly the perceived rich who own cars. You see, such buzzwords are celebrated by people with little and wrong information who are a lot more dangerous to themselves than the people with no information at all.
Reminds us of this story of monkeys that broke into song and dance in celebration upon being told that the man who used to kick them out of the main plantation had died. This naive celebration turned calamitous when a few months later misinformed monkeys learnt that the dead man was the farmer responsible for the maize they survived on. They had no maize to eat.
Today, the less informed masses - and they are in good company of some very interesting fellows in Parliament who have shown all and sundry that they lack basic grasp of issues – are celebrating the affliction of some big corporates and the perceived rich.
Big companies are on the verge of leaving because of the punitive business environment that the 2024 finance bill portends and this naive celebration that the big fish have to pay more for the small fish to be comforted might just turn out to be bad news for the small fish.
Every corporate, whether in the service or manufacturing sector, that shuts down leaves the common citizenry worse off. Jobs will be cut for the folks on salaries and wages and in the last few days we have seen a big media house sack several employees.
There will be less money circulating in most local economies at the micro-levels where these salaried folks live, and sadly local businesses, especially mama mbogas, boda bodas, the hospitality industry and the transport industry will suffer a dearth of return clients, which, as economists project, will shrink the government tax base.
Simply put, the exodus of employers due to a high cost of doing business is like the death of the proverbial farmer whose farm was a sure source of food for the monkeys. No one should deceive Kenyans that high taxes that raise the cost of doing business is something the hustlers should celebrate.
We have not reached there yet: for a country to attract investments, build a strong manufacturing sector that creates jobs and help its citizens build wealth at the individual, family and community level, the direction has to be tax breaks.
Well, the state’s sure way of raising money is through taxation and even loans, whether commercial or concessional loans are only available to a country because of its sovereign people ability to fund the state through taxes.
But countries that have high tax regimes started off with friendly tax rates that attracted massive investments to a point where they can tax at the optimal level because of a solid industrial base that guarantees such benefits as employment and other social amenities.
The 2023 Finance Act and the ripple effect the proposed 2024 one will eventually afflict those that the good CS says will be comforted, and you don’t have to be an economist to discern what is obvious.
Experts and industry players from different sectors foresee a dark picture ahead, but Kenyans will survive, not because politicians are right, but because we are a resilient people.
We’ve got that undefeatable spirit of Akoko Obanda in Margaret Ogolla’s The River and the Source. Even at the point where the river was trickling like a rivulet and at the point of drying up, the flow never ceased.
