Value Added? Where?

My attempt at understanding what is commonly called VAT may not be exactly what most actuaries, economists or statisticians agree with directly but I wish to present it all the same.

Value Added Tax is the levy that is charged on the value that is added to a product or a service after production or at each stage of production. I hope we’re still on the same page.

My central focus is on the words before the ‘tax’; Value Added. Do Kenyans feel the ‘Value’ on the products they buy? Let alone the ‘Value’ of the ‘Tax’ collected by the government?

Retrospectively, when was the last time you were snubbed at a government office? Or shrugged off the thought of drinking mercury-laced sugar in your cup of tea? Feared consuming what has been termed ‘plastic rice’? Counterfeit medicine? Lead-saturated bottled water?

Yet government through the Kenya Revenue Authority (KRA) and the Kenya Bureau of Standards (KEBS) through its officials are talking shop.

Complaints have been lodged at the Consumer Federation of Kenya (COFEK) by dissatisfied Kenyans who feel cheated into buying products approved by the government and a tax levy charged on.

Kenyans needs to understand why parliament, without much opposition, passed the bill proposing the addition of VAT when counterfeit and illegal products flood the economy. 

According to a story published by the Daily Nation online, dated May 28^th, this year, experts warn that the country might be headed for a scenario where it will be under the control of counterfeiters by 2030, unless action is taken.   

Is it prudent for the government through parliament to demand a pound of flesh from Kenyans in the name of funding its development agenda? 

According to sources privy to the treasury, government intends to collect over Ksh. 70 billion over an extended period of time in order to fund Jubilee big four agenda. 

Picture of a fuel dispenser

With a ballooning wage bill and an outstanding national debt of over Ksh. 5 trillion surely an addition of 16% VAT on petroleum would be a great disservice to Kenyans and an extra to the high cost of living already experienced in the country. 

National Assembly Speaker Hon. Justine Muturi, Treasury CS Henry Rotich, Attorney General Paul Kihara addressing the media on the 16% VAT Fuel tax

The thought that lingers in my mind, is what the series of meetings and caucuses behind closed doors led by National Assembly speaker Hon. Justine Muturi is going to achieve with regard to this matter. Especially now that the ‘ship’ (bill) has sailed and is awaiting presidential assent. 

The greatest want in Kenya, is for men (and women) who can offer sound fiscal ideas so that we can learn to live within our means. We have already lost too much to overspending, over-borrowing, and corruption to add to ignorance.

Budgetary policies that are not dictated by the International Monetary Fund (IMF).

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Judicial sobriety must also come to play when dealing with economic challenges such as of this nature. 

How can there be an explanation for the case of High Court Judge Chacha Mwita dismissing the hearing of the 16% VAT bill on grounds that the bill is inconclusive while the same judiciary at a Bungoma High Court suspends the implementation of the bill altogether.