OPINION: Economic justice should be central to revenue collection strategy

By Leonard Wanyama

Following the 2022 election, Kenya is now gripped by a tax fervor in public debate. Recent presidential pronouncements have helped push focus on revenue collection policy making and implementation.

However, even as taxation weighed heavily in the campaigns, the government was collecting public comments on the national tax policy. Civil society initiatives such as the Okoa Uchumi Coalition made submissions as part of larger efforts in championing fair taxation in the country.

Fair taxation is viewed under two main pillars. First is the capacity to raise revenue domestically. This examines the levels of progressivity, self-sufficiency, and the role of incentives in the country’s public finances.

Secondly, taxation must be examined in terms of the level of citizen satisfaction with the existing revenue system. This would answer questions around whether revenues collected are properly allocated and spent for public benefit.

Launch of the ‘Fair Tax Monitor Kenya’ by Tax Justice Network Africa (TJNA) and Oxfam Kenya is therefore very welcome because it presents a structured framework for consideration by academics, policymakers, politicians, plus other stakeholders such as faith-based groups.

Conversations on tax justice should look at the compromises or tradeoffs in relation to competing moral perspectives, sector interests, and constituency demands to which our Public Finance Management (PFM) system is beholden.

Accordingly, while the government may be keen on enhancing growth, and the private sector is looking for profitable investment opportunities, civil society concerns about fairness look at the consequences of actions during implementation policy on the less fortunate in society.

Subjects of public interest such as what kinds of burdens are imposed on the public; how effective is the current tax administration mechanism; what revenues are lost; how transparent are existing systems; is government spending effective; or the impact of waivers on service delivery, are important in determining tax equality and equity in Kenya.

Therefore, if the government is truly genuine in pursuing fair taxation, the current administration must then commit to conducting PFM based on Human Rights-Based Approaches (HRBA) to taxation.

Embracing HRBA demands the adoption of five main principles. Firstly, there must be constant participation of stakeholders. This will allow for the articulation of their ideas and influence decision-making processes.

Secondly, there must be greater accountability in tax policy making and implementation to allow for increased honesty through the examination of reports for purposes of monitoring or possible sanction in the event of any transgressions.

Thirdly, any attempt to achieve fair taxes should push for non-discrimination thereby exercising impartiality in the provision of services. Fourth, tax policy should seek to empower citizens’ lives by working towards uplifting livelihoods.

Lastly, the legitimacy of the tax system can only come about by respecting the rule of law by fighting against impunity, corruption, or any circumvention of due process for whatever justification to uphold the sanctity of the Constitution of Kenya (CoK) 2010.

Ultimately, in understanding the tenets and dialogue that accompanies the ‘Fair Tax Monitor,’ relevant executive agencies, and parliamentary bodies in Kenya should work to achieve four main goals to prove their commitment to a better tax system.

Government agencies, national representatives, and decision-makers in the current administration should primarily work towards enacting legislation or guidelines on public participation to enable effective stakeholder engagement.

The development of a clear feedback mechanism should follow. This will provide clarity about who is responsible for what and allow them to properly address public concerns that are raised.

Also, the government should make a bold commitment that tax exemptions and other instruments such as Double Taxation Agreements (DTAs) will not be given arbitrarily, and that parliament will increasingly be involved in assessing their costs versus benefits.

Finally, there must be a broad discussion on the taxation of essential items that considers ripple economic effects and the burden on low-income earners.

[The author, Leonard Wanyama, is the Coordinator of the East African tax and Governance Network (EATGN). Twitter: @lennwanyama]