Why Treasury should forgive our July taxes

Kenya it a very religious country, going by the fact that every meeting starts and ends with a prayer.

Religious leaders now have the same status as noble professions like teachers, lawyers and doctors. I hear often of “my pastor,” just like my lawyer, doctor or teacher.

“My” is often used for professions than can save you from misery - a lawyer from jail or fine, doctor from suffering and teacher from lifelong misery. For the pastor, it’s misery yet to come. The prosperity gospel has brought that misery nearer and the need to eliminate it.

Students’ career aspirations are shaped by “my.” Ever heard of my geographer? My economist? Curiously, lower professions have “my” such as “my barber” and “my house girl”. 

The Ruto government also attributed its victory to prayers, though that can’t be tested empirically. Sadly, the Shakakhoka deaths have shaken our faith in religion. I hope in the fullness of time this mystery will be unveiled.

One of the key pedestals on which religion is built is forgiveness. We were taught that since Sunday school. As I grew up, I kept wondering why there are prisons. Should all not be forgiven? The other central theme in religion is charity, but why is poverty so prevalent?

Forgiveness and charity are counterbalanced by envy and jealousy. We celebrate failure and instead of doing our best to uplift others we rejoice when they fail. The spirit of Cain, it seems, hovers over our land. Maybe economists should start modeling jealousy and envy and stop assuming we are objective.

Yet the world has enough space for success. There is success even in space if earth is boring. Noted the pride in countries that send probes to the moon?

My encounter with jealousy and envy has almost convinced me it’s in our genes. What do biologists say? We have heard enough from philosophers.

Enough preaching. With the Court of Appeal allowing the implementation of Finance Act, 2023, the government has backdated the taxes to July 1. That could mean recovering the tax we should have paid.

Why can’t the government forgive us that tax? We have no doubt the government needs money, but we too need it. Let me state my case as an economist, voter and senior hustler. 

If that money is taken by the government, it will take time to be utilised. There might be a debate on where it will be used and when. And politics will come in. There is no guarantee it will go to the sector with the highest returns in terms of jobs created or value for citizens.

Remember, speed of money circulation is a factor in economic growth. In private hands, Sh100 will yield more economic returns than in public coffers. You want to contest that?

If the government forgives us in the spirit of religion, or just being human, we shall use that money instantly or save it. The speed of circulation will go up, and growth will be felt. Either way, the economy wins.

If we use the money, the economy will feel it through increased demand for goods and services. We shall use the money to pay school fees, buy food, pay rent, transport, send to our elderly parents and pay tithe, among other noble causes. And KRA gets its VAT.

Some could use it to pay dowry. More so under this weather.

We shall use that money as startup capital for small businesses resulting in more taxes and jobs. Kenya’s economy is 80 per cent informal. We shall enhance what we are good at.

We shall take alcohol in moderation, if we must. But that too has tax! Contrary to popular belief, I can assure the government we are good people. What percentage of the population is in prison?

If we save and keep that money in the bank, the government can borrow it through Treasury bills and bonds. To avoid crowding out, the private sector should borrow that money and invest in sectors with the highest return. That sector is better in spotting opportunities than the public sector. 

The forgiveness will act as an economic stimulus package. Traditionally one way to stimulate the economy is through tax cuts. We can try forgiveness this time. The other is Keynesian, government expenditure.

There is another better reason for forgiving us; it will help reduce the anger over the Finance Act that led to riots and deaths.

Such an act will portray the government as caring, and fatherly (or motherly). It will touch hustlers and ‘sonkos’ alike. After all, apart from air, nothing else ties us together more than the economy.

You never know, we could end up forgiving the government for taxing us if it forgives us the July taxes. Or do we pray for it to forgive us?