[Column] Bob Koigi: Why paying taxes matter to businesses
Taxation is perhaps one of the most frowned at concepts in small businesses, with the reasons being many and varied. To start with, it is perhaps one of the least understood concepts in modern Kenya and Africa, especially given the fact that it is only within the last decade or so, that majority of countries in Africa have made serious attempts at enforcing taxation on individuals and businesses.
Within the earlier political dispensation, tax evasion was hailed as heroism, leaving the tax burden to only a few individuals within the formal business sector. Many say that this is partly the reason Kenya earned the unenviable distinction of being among the most highly taxed nations in the world.
This, coupled with little services delivered for the high taxes, has over the years led small businesses to shy away from operating formally, thus reducing their chances of falling within the radar of for example the Kenyan taxman, the Kenya Revenue Authority (KRA).
In effect, still not many small businesses feel enthusiastic enough to honour their date with Caesar.
One of the biggest ironies in any economy is failure to see the fact that no government can operate without finances, which it gets in form of tax from the citizens and businesses operating within the country. Tax evasion has not only cost the taxman but has equally cost our economy and the delivery of the many vital services in the country.
It is no secret that Kenya like many other countries in the East Africa region lacks proper tax policies to govern and protect it tax base and strengthen it financial architecture. The inadequacy of these vital tax tools has seen the country lose of billions of shillings in revenue as a result of tax leakages and illicit financial flows.
The major conduits for evading tax in Kenya according to tax experts are mis-invoicing, abuse of transfer pricing mechanism and use of tax havens.
No matter how rich one might be, no individual can afford to construct his private roads to wherever he wishes to travel, ensure security for all his premises and afford comprehensive medical care for all his employees and their dependents.
These are however some of the essential services which are offered by the government to all citizens for a little fee levied on income earners within the country through taxes.
With this background, it might not be difficult to see just why businesses, their size notwithstanding, should honour their tax obligations as a civic duty. And for this reason, payment of tax has been made a voluntary obligation for all people earning income within the range that the government has stipulated as taxable.
And the excuse of tedious procedure for filing returns should not even arise. Today, making tax returns have been made easier, as all that one needs is download tax return forms from KRA’s website, fill them in and submit the returns online. For the prosperity of the nation, the economy and that of our future generation lets give to Caesar what belongs to Caesar.
Multiple award winning Kenyan journalist Bob Koigi is Chief Editor East Africa at Africa Business Communities
