At the conclusion of Kenya’s fiscal year in June, it was revealed that only 5.5 million of working adults paid taxes, a far cry from the 25.64 million individuals that make up the over 18 population. To ensure that it collects taxes from all sources, the Kenyan Revenue Authority is seeking an amendment bill to the country’s social security scheme (Huduma Namba) to enable it to access Kenyans who have failed to pay taxes, asking that the unique personal identification numbers carried by the card also serves as the PIN for tax clearance purposes. If Parliament grants this amendment, the KRA will have access to fundamental data such as personal, biometric and biographical data. To discuss this move of the KRA going after tax cheats by using the Huduma Namba, Business Edge speaks to Ken Gichinga, Chief Economist at Mentoria Economics who joins Lekan Onabanjo from Nairobi.
Prior to now, Kenya’s tax system has mainly focused on personal income tax, corporate tax and value-added tax. All of these come from the 5.5 million eligible adults who file tax returns, and Kenya is looking to widen the bracket it covers. While it is possible in theory to use the Huduma Namba to identify tax cheats and evaders, it is less likely in practice. “It would be a challenge as the nature by which the data used for the Huduma Namba was collected has been the subject of a court case,“ Ken Gichinga says. “Some elements of it are considered to be unconstitutional regarding privacy and personal data and will be a barrier to what the KRA is asking to do.”
In addition, Gichinga says “The elephant in the room is the issue of land rates. In many countries, land and property rates tend to be the key drivers for socio-economic transformation. Land rates in Nairobi for example are based on values that are almost forty years old. This needs to change.”
Watch the full episode of Business Edge above.
