VAT Bill simplification a complexity

The over emphasis on tax simplification in the VAT Bill 2013 is in itself a complexity. This need for simplification that has been used as a rationale for a standard rate of 16% for all taxed goods and services has too many grey areas.

It beats logic to tax everything at the same rate as different goods and services operate in different market dynamics that may merit higher or lower taxes. For instance in case of an acute shortage in say maize, you might be excused to reduce its VAT which does not necessarily require you to reduce the VAT of say petroleum products.

Hence the rationale of raising the VAT of electricity currently taxed at 12% to 16% is unwarranted especially in the face of the fact that our economy is being stifled by high cost of inputs notable electricity.

This is further complicated with the fact that the Principal Secretary can reverse the tax by 25% upwards or downwards meaning it could either be raised to 20% or lowered to 12%.

It is not however indicated in the Bill whether this will be a blanket raise or lowering. But it is safe to assume that it will be so given the insistence on a standard rate of 16% just so tax collection can be simpler.

I wouldn’t deem it wise though. What would be the rationale of say lowering all taxes to 12%  if say there is a crisis of girls dropping out of school because they cannot afford sanitary towels (to be taxed at 16% in VAT Bill)?

I think there should be different categories say ‘Basic Commodities’ (overtly described and parameters for defining them set) that should be taxed either at 12% or exempted all together. The proposed tax on electricity unless justifiable by another reason should not be raised in order to stimulate SMEs who find the current rates inhibiting.

Then there is the case of vesting powers of raising and lowering tax on the Principal Secretary, ever heard of the Boston Tea Party. Well the Americans set precedence by rejecting the Tea Act in 1773 because it violated their rights to be taxed only by their elected representatives. It is immoral to put all the taxation powers on one man, in the executive. Albeit our legislative members seem more poised to represent their political parties rather than their electorate who would suffer if such tax is imposed, it is better to vest power on a democratically elected legislature than an appointed stooge of the executive.

Mirror Mirror

Mirrors are scary things because we see ourselves and the fear within us is so immense its scary. So we take a peek at those shiny surfaces afraid that those next to us will not see you notice that freckle on our collar or frown at that aging wrinkle. And like the woman standing next to me as the elevator levitates corrects her posture and steals glances at the mirror and then refers to me and I pretend not to have noticed.

Mirrors needn’t not be glass, they can be our reflective perceptions and insinuations. They can be our society or our history. Our stories. Mirror mirror on the wall who is the fairest of them all. So mirrors can be deductive, they can know what we do not know or admit. And they are truthful, or is that just another idealism of fairy tales?

But hark lets take GADDO for instance, the most perceptive caricaturist of our time. He did a mirror cartoon where Raila is standing in front of a mirror and the PM label on his door read as MP in the mirror. Now I call that a genius of the mirror in GADDO’s mind. Then there is that mirror one where Kibaki is staring into a mirror and seeing Moi and a tag line, ‘The end of an error (era) and the beginning of another.’ It must be very dangerous to walk into GADDO’s house if he has such mirrors that see through the emperor’s clothes.

So if mirrors have a peculiarity of seeing things like they are, then this mirrors are scary things. Like the one in this shop in town which had the portrait of three presidents reflected in it. When Uhuru took over the reign of power people from Nyanza were relieved when he shrugged off the need to pin up his portrait on all  shops in the spirit of ‘Big Brother is watching you’ that Moi had associated his portrait with. Now in Kisumu one can barely find the portrait of a president in a shop, maybe mirroring their feeling of being president-less. On the contrary as the AG argued the portrait was a symbol of patriotism, and pinning it up was an allegiance to the president and country, which I agreed especially in light that it was not being imposed. Until I entered the shop on Tom Mboya street and saw the portraits on the wall. Like the glaring absence of portraits on Kisumu shops, the glaring presence of only three presidents caught my fancy.

There was an old portrait of Mzee Jomo Kenyatta, that seemed like an apparition of an old calendar dusk yellow and aged probably resurrected from old belongings, there was the awkwardly smiling Kibaki and blood shot eyed Uhuru. Either Moi had awfully wronged this man or he was so tribalist that he had erased 24 years of history.

There was also photocopy of the Mau Mau in a detention camp in Nakuru from what I made out of the sketched tag line. I asked the owner about it. He reiterated that it was good the British were finally going to pay, that was not what I had sought to find out, I had overlooked current events. But he took it upon himself to point out at Kenyatta, now that’s a man who knows about the Mau Mau.

I was not sure whether to break the sad news that he was not Mau Mau, and that he had denied it and that allegation was only used by Her Majesty’s government to imprison him. He was leader of the political wing though. So I said ‘JM was Mau Mau, I’ve been reading his book, I guess we do not know a lot about them,’ tactfully. ‘No, Kenyatta is the one who knows about those white people and what they did to him, a true warrior,’ he countered assertively.

He had chosen his mirrors that saw three presidents in Kenya and his version of our history, just like the shops in Kisumu that had no presidents, I should visit Eldoret.

But can mirrors be made to see what we want? Or do they tell the truth and its just that we chose to interpret it in our own way. And as we continue seeing it this way do we stand a chance of getting lost in the blurriness? And can we allow our children to view these distortions they will no longer know the truth?

Or are mirrors myopia, a misconstrued version of a wider world, and will that makes us miss the bigger picture. Like a Sh50 million bronze statue of retired President Mwai Kibaki hoisting aloft a copy of the Constitution during its promulgation on August 27, 2010 eclipsing the years and struggle that brought us to this moment when we are faced with looming food crisis as indicated by an Oxfam report. Then we are doomed like narcissus that we will be entrapped by beauty (short lived tyranny) of the moment to our undoing.

And when we grow old, looking at pictures and statues of our images frozen in time, will they tell of where we will be, and what we will have done now to get us there?

VAT BILL 2012

When Ben Berananke announced the end of the Quantitative Easing by the US Federal Banks, American markets remained glittery, with Gold prices falling the lowest in nearly three years.

When The VAT Bill set to reduce tax exemptions on 395 goods and 22 categories of services plus 416 supplies of both goods and services, hit the floor of the house, it was welcomed with demonstrations outside parliament and general public rebuttal.

Although they both enjoy public vitriol, they are both necessary policies and are a roll back of government interventions in crises (American Financial Meltdown and Inflation in Kenya two years ago) which had to have a death clause sometime.

The VAT Bill which is in line with the constitution, that requires amendment of existing law on provisions of Principles on Public Finance article 201 (sharing fairly the burden of taxation) and article 210 (outlawing tax exemptions and including state officers to taxation) is supposed to save the taxpayer 1.5 billion in tax refunds that are accumulating each year in KRA as a result of the complicated framework in place at the moment.

The Battleground

Naturally this benefit does not resonate to the common mwananchi who only sees the grim picture that is being played to the public gallery. Like the American quantitative easing which is going to be gradual, the Bill is proposed to raise the said tax in three years. That will save Kenya 4.5 billion to tax the price of processed milk by 6.4 shillings a packet. Albeit we know that the common mwananchi consumes unprocessed milk which is not taxed in the first place.

Feral Hogs

In any case the common mwananchi never even benefited from the tax exemptions introduced two years ago to cushion them from inflation. Manufactures who were paying the 16% then did not reduce their prices after they were exempted but are hinting at hiking them if they are introduced. But as Richerd Fisher of the American Central bank stands steadfast that the ‘tapering’ (easing its support) will not be deterred by the ‘Feral hogs’ in the markets, our government should address the concerns that bleed the support of the Bill which are mainly mythical.

Cost Benefit Analysis

Methinks that the over emphasis of the simplification of the VAT Act currently in place should be backed down to accommodate the concerns being raised. Scrapping of the 12% tax bracket to tax everything at 16% can be reviewed to assure that some items are taxed lower than others especially those receiving wild clamor like sanitary towels and basic food commodities.

And like the quantitative easing the taxation proposal schedule can be reviewed to make it gradual instead of one violent shift that scares the tax payer, in fact this can remove the justification for our ‘Feral hogs’ to increase the prices of the basic food commodities.

Safari Rally Driver

What is important to note though is that the Bill which will ensure the President, Kenya Armed Forces, Charitable Institutions, Safari Rally Driver, Goods by aircraft operators and materials to refurbish tourist hotels join the fray of taxpayers will save Kenya billions and in fact earn it revenue it has been losing. As Max Baucus put it, Tax complexity is a tax in itself.

Pursuit of Happiness

Five o’clock was approaching fast and as an instinct he impatiently looked outside from his fifth floor office window at a security guard frisking random men and women coming into the building. Maybe it afforded him a sense of security against the Al Shabab, he thought, but then again with James McCormic’s golf ball detectors being used as bomb detectors he might as well just leave life to chance, those noisy toys cannot detect nothing. He lit up at the sight of one security guard running around a vehicle with a mirror who could not probably tell the difference between a bomb and all the metal parts beneath the car, and he didn’t even check the boot, that could be a better hiding place, and what would he even do if there was a bomb, run perhaps. There was a time, when a door was a just a papyrus reed mat drawn over the door like the stone at Jesus tomb his uncle had once said to him. Now we need metal detectors that do not work, security guards who are clueless and more probable of flight than fight, governments that are more likely to kill us than protect us and locks that are more likely to be breached so that we can buy the new improved lock, he thought to himself pleased by the thoughtfulness of his analogy.

He looked back at the time, it had not moved, neither had the work he was supposed to do. He crumpled up the papers and decided snugly that he would work from home which he knew so well was an impossible feat considering all the hustle it would take to get home. He carried the work anyway and opened a face book page on his work PC to kill the time. All of his virtual friends were on Facebook incidentally, updating nonentities probably all of them killing time like him waiting for the five o’clock magical hour.

He had watched a series about the 8 to 5 idea, credited for America’s great industrialization that saw Clock punching seen as an efficient maximum input, minimum cost way of achieving maximum production. With over half of the city workers on Facebook all afternoons waiting to punch the clock at 5 without necessarily making input to productivity, the idea seemed delusional, he thought.

He looked again at the time and saw the magic of number five. He sprang up to action. Packed everything in a hurry and darted out of office. He flushed feigned courtesy around of how he hoped to see every pitiable face in the office the next day while wishing it was a Friday so he could avoid their communal miserable eight to five wait.

He poured out of the office like children after the school bell rings. Millions of people, thousands of cars all into one small city headed home in one impossible rush all at five o’clock like a penchant for the effectiveness of the eight to five ‘clock punching’ American industrial age system.

***

She had left her office earlier than usual, she was not a fan of the constantly clogged transport arrangement that all employed people had to face. Probably that was why she had chosen to be self employed. But all the rosy pictures of mama mbogas smiling from billboards sponsored by banks proclaiming the glory of small business told half the story. In fact she was avoiding the owner of the tiny office she had rented and had not serviced her loan in two months. She wore a worried frown that perfectly made her gel into the worried lot that was always walking along the city streets. Today she had decided to take a train, it would be faster but she had to go early and secure a seat.

She walked past a stack of books and stopped to get one to pass the time reading on the train or on the jam the next morning. ‘Rich Dad...’ ‘How to succeed...’ ‘Believing in a better you…’ ‘Breaking the limits…’ she could not choose from the array of borrowed philosophy bundled in quick fix inspirational literature. Aaah, she saw something about costs. She has been struggling with that. Or should she take the one on a more efficient management, or getting the best out of the employees, or the God ones that always had the best solutions without actually offering any solutions. She bought the one with something about a purpose in her life, just next to the one on ‘The Pursuit of Happiness’.

She took her copy and paid the hawker who was eagle eyeing the City council askaris, a problem he could not find solution to in his many wise merchandise. She joined back the flows of millions rushing out of employment at five o’clock as if the rush would magically reward them with reaching home as early.

The traffic policeman was waving traffic at the railway station round-about gesticulating contradictory instructions to the traffic lights. The crowd she was with, flew into frenzy when he ordered the cars to his right to stop while the traffic lights gave them a go. A wild porter from the opposite side rushed towards them with his metal wheel burrow like carrier. They all flew to let him pass save for a slow oldish man. The porter halted angrily in his tracks, shouting at the man to be watchful, holding the oldish man in the same contempt as she was for slowing her by walking in front of her like he had all the time in the world. The oldish man moved to the side ungrudgingly dragging his lame leg that was the cause for his inability to keep up. She walked away guiltily as did the porter whispering sorry inwardly with the fear of a similar affliction rather than to purge the contempt they held him. She half trotted, half ran to get a seat at the train station.

***

He had ran all the way to the train and for the first time this week he had caught a seat. He settled at a green coach adjacent to a brown one that was more of rust than intentional colouring. He flapped the edge of his shirt for some cold air as sweat stung his armpits. He would buy that nivea stress sweating they keep advertising on TV but would it stop the stinging sweat from all the running to catch the train, he thought to himself.

‘Brayo,’ she called out, ‘is  this really you?’ He turned and was looking at Njeri, they had been at school together.

She had always thought he would make a good Managing editor at a big Newsgroup, probably international one back at college. He was sure she would have been a CEO herself probably of a company of her own.

‘What, Njeri? How have you been?’ he asked her knowing she was not that big CEO after all, why would any successful person take a train to Eastland’s instead of joining the motorcade towards Westland’s.

‘Am good,” she lied acknowledging that he was not that successful either. She asked what he was doing.

He was employed at a firm in upper hill, a well paying job that was growing and opening up. He was doing well. He lied, he was at a contract in his current job that paid little and worked the hell out of him, and he hated his job and pitiable life all together.

She countered that she had her own business, self employed, she said with an air. Her company was also expanding rapidly, she added handing him a business card with the title of executive which was perhaps the only good thing about her business that was running to losses, hardly got jobs and hounded by loans.

And as the train left the station at 5450 ft above sea level, Nairobi stooped from the tall skyscrapers, knelt at the lanky down town and lay low at the sprawling slum that shrunk away to Eastland’s like the lie they had to live each day, in the pursuit of happiness.