Taxes Were Never Meant to be Gov't Revenue, British Colonialists Created Tax to Force Kenyans to Work on Farms – Tuko.co.ke
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Taxes today are a quagmire; the new national and county governments are in a fix.
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The economy is in a slump, but development projects must continue, so we hear President Willaim Ruto talking about widening the tax bracket.
We see counties such as Siaya increasing taxes, but until we clearly understand what taxes were truly created for, we are perhaps using the wrong system to archive the right goals.
Taxes were never meant as government revenue, yet here we are utilising them as the primary source of government income.
We are faced with shortfalls and will most likely not have sufficient Government revenue within Ruto’s 5-year tenure since economies take a long to change and grow.
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A shortcut to fixing the tax shortfall isn’t by seeing how best to use the current limited tax system but by understanding why taxes why were created and then making adjustments based on this.
So what were taxes for? I’ll have to indulge you in some short history.
The British came to Kenya as a means of acquiring new land for growing crops, exporting them to Europe and enriching themselves through this.
They found a rich land in Kenya, and they settled here.
They wormed their way into political power and, through this, had a strong say in National matters.
They acquired large tracts of land. Many had no less than 1,000 acres, with some going into 10,00 acres.
This created a problem. Human labour; they didn’t have enough human capital to till their land. In today's world, you can simply hire people and pay the agreed amount but not so in those days.
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You see, early Kenya was a non-monetized economy, meaning we didn’t need or use money, and so how do you hire people who neither used nor needed your money?
There simply was no easy answer to this question, and so they came up with a long-winded but brilliant solution.
Seeing that they were our rulers, they came up with a law that every household has to pay a tax of 1 rupee. It was known as a Hut Tax.
If they didn’t pay, the British forces would burn down their hut.
Imagine a Maasai by the name of Olekina being told to pay 1 rupee per year.
He has never even seen money leave along earning it, but because he doesn’t want to lose his home, he decides he must find a way to acquire the rupee.
Now the only way to earn a Rupee was to work for the British on their farms, growing crops like tea and coffee.
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The British announced they were hiring workers and paying them in Rupees, and so all around Kenya, Olekina, Kamau, Juma and Odiwour all got jobs and were paid in the aforementioned currency.
Once they were paid, they went to the British office and paid the 1 Rupee tax; with that, their home was safe.
This is a powerful concept to understand.
Look at the sequence; the British paid salaries in Rupees, which they came with from the UK; a tax was then instituted with severe consequences if not paid.
The Kenyan sought work so as to attain the tax currency, and then after working, the Kenyan paid the British the tax in the currency the British required, which was the Rupee.
In this sequence, you can clearly see that the British colonial Government did not need the Tax money as revenue since they are the ones who issued the tax money in the first place.
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They used taxes as a means to coerce and force Kenyans to work for them.
Let's now analyze matters today.
The Kenyan Government is the sole issuer of the Kenya Shilling.
The Kenyan shilling can have only emanated come from the Kenya Government and nowhere else.
If that is the case, why does Government rely on collecting taxes to fund itself, yet the money used to pay taxes could only have come from the Kenya Government itself?
Why do they borrow from the local market whilst any Kenyan shillings circulating in the market can only have come from the Government?
Why not just issue create/ print more non-inflationary money to use for Development projects whenever they need to see as this is the true historic foundation of our currency?
The writer is Tony Mwiti, a Progressive Economist, Deficit Funding Expert and Political Advisor willing to consult and conduct presentations on this.
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The views expressed here are the writer’s and do not in any way represent the position of TUKO.co.ke.
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Source: TUKO.co.ke
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