Kenya’s government should stop giving tax breaks to multinationals, instead of taxing the food of poor people who can barely afford to eat, campaigners say
NAIROBI (Thomson Reuters Foundation) – Kenya’s government should stop giving tax breaks to multinationals, instead of taxing the food of poor people who can barely afford to eat, campaigners said on Monday.
There were protests last week against government plans to introduce a bill imposing 16 percent value-added tax (VAT) on staple foods, like flour, bread and milk, as well as medicines and sanitary pads.
Meanwhile, the government loses 100 billion Kenya shillings ($1.2 billion) in tax exemptions each year. Campaigners say many of these exemptions are unnecessary and fuel corruption.
“It’s not moral that we suffer and that the richer get richer,” said Makena Mwobobia, ActionAid Kenya’s acting country director.
“The 100 billion that was given as tax incentives could actually have sorted out the teachers, the nurses, could have built the clinics and equipped (them).”
Kenyan teachers are on strike for a third week, demanding more pay. But the government has vowed to rein in the public wage bill which is now 50 percent of annual tax revenue.
It is trying to plug a deficit of around 330 billion shillings ($3.8 billion) in its 1.4 trillion ($18 billion) budget with foreign and domestic loans.
Campaigners say the budget deficit could be met by removing tax breaks for multinationals, broadening the tax base to include the informal sector and increasing taxes on the rich.
Kenya is a highly unequal society, with grinding poverty existing alongside conspicuous wealth. It does not have any inheritance tax or wealth tax. Plans to introduce capital gains tax have yet to be implemented.
“Those who earn more must pay more,” said Pascaline Kang’ethe, ActionAid’s technical advisor on governance.
“We cannot continue to say that a tax system is efficient and it is fair and it is equitable … when the impact on the common man is more than on the rich.”
Millions of Kenyans can barely afford to eat, subsisting on a bowl of porridge a day.
“Life has become so expensive. You cannot tax sanitary pads. You cannot tax flour. You cannot tax wheat, things that the common person spends money on,” said Kang’ethe.
Developing countries give away over $138 billion a year in tax incentives to multinational companies, ActionAid said in a report last Thursday.
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