By Gabriel-Eddie Njoroge

Kenya has one of the fastest-growing economies in the African region, with its economy growing at about 5.8 percent rate compared to the largest economy in Africa, South Africa, which has stagnated at 0.8 percent according to a World Bank report.

However, the country still faces some short-comings, with it failing to realize its set total tax goal by USD 433 million by November 2018 as per the national tax regulatory body.

Kenya has a population of about 50 million people, of whom, 18 million people were registered to vote as per the last General Election in 2017.

Meaning Kenya has at least 18 million individuals who are eligible to pay taxes. Of the 18 million, only about 7.6 million people are registered by the Kenya Revenue Authority as eligible to pay taxes.

Of the 7.6 million, only 2.6 million entities filed their returns by the deadline set. These entities include individuals and corporations, whereby, of the 2.6 million; 900,000 are registered companies who paid corporate taxes leaving 1.7 million tax compliant individuals.

“Around 16 million Kenyans are unaccounted for in tax base index,” said Professor Attiya Waris, Lecturer University of Nairobi in a forum convened by the Institute of Economic Affairs (IEA) – Kenya and Friedrich Ebert Stiftung (FES) in Nairobi.

Professor Waris at the IEA forum

This raises the question as to why a large portion of the eligible citizens do not pay the taxes required. According to Professor Waris, while most Kenyans are in the informal sector, the labor laws recognize only the formal sector thereby making taxing of workers in the informal sector difficult. There is a clear divide between the citizens in this field and the government and a lack of knowledge on how to bridge this divide.

Another reason may be distrust by the citizens that their taxes will be utilized in a good manner since there is a sharp rise in corruption occurrences where the taxpayers’ money is funneled to individuals for their own gain instead of using the money to enhance the lives of the citizens. Therefore, the taxpayers become disillusioned and fail to file their taxes and decide to utilize this money for their own personal betterment.

In 2016, the Ethics anti-corruption commission and national treasury reports, estimated that a third of the national budget is lost through corrupt dealings annually while the 2018 auditor general’s report revealed that the taxpayer can be losing USD 10 billion every year.

These events have led to discussions on how to solve all these problems that encumber the taxpaying process and the utilization of the money collected. When the government streamlines the process and make it more transparent, the citizens can trust that their taxes will be used in a better and efficient way that can benefit them all.